IMF allocates over $285 million to Georgia for economic reforms

IMF allocates over $285 million to Georgia for economic reformsThe Executive Board of the International Monetary Fund (IMF) announced on Wednesday it had approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Georgia for an amount of $285.3 million (100 percent of quota) to support the authorities’ economic reform program.

According to the IMF's statement, the EFF-supported program will help Georgia reduce economic vulnerabilities, pursue well-coordinated policies, and promote economic growth.

"The program includes ambitious structural reforms to generate higher and more inclusive growth, focusing on: improving education; investing in infrastructure; making the public administration more efficient; improving further the business environment to boost the private sector as a growth engine," read the statement.

The Executive Board’s approval allows for an immediate disbursement of $40.7 million. The remaining amount will be phased over the duration of the program, subject to six semi-annual reviews.

“The Georgian authorities have adopted an economic program aimed at promoting growth while maintaining macroeconomic stability," Tao Zhang, Deputy Managing Director and Acting Chair of the Executive Board, said.

"Georgia faces several economic challenges, including a narrow production base, external and fiscal imbalances, and subdued economic growth with high unemployment. This situation has been exacerbated by low growth in major trading partners largely resulting from lower oil prices. The authorities’ program supported by the Extended Fund Facility will help address these challenges by reducing fiscal deficits while shifting public spending toward investment, accelerating structural reforms, strengthening the monetary policy framework, and enhancing financial sector supervision, safety nets, and bank resolution frameworks," he proceeded.

“Structural reforms are critical for the success of the program, enabling higher inclusive growth and economic diversification. The reform effort will focus on capital market development, pension reform, a PPP framework, public financial management, private sector governance and competition, and education reform," Zhang added.

He also stressed that risks to program implementation are significant, but said they "should be mitigated by the authorities’ determined commitment to the policy package and the broad political support for the program.”
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