John Wakeman-Lynn, head of IMF mission, said that Georgian government should define its further cooperation with the Fund this September, when Poverty Reduction and Growth Facility program (PRGF) will come to the end. There are three ways of future cooperation: PRGF continuation, so-called 1-year stand-by program and supporting policy instrument, Lynn notes.
The head of the mission has summed up visit results of May 24 – June 1 period. He stated that on basis of the figures of the 1st quarter, the mission plans to recommend IMF executive board to finish 6th review in terms of PRGF. In case of positive decision, Georgia will receive last tranche of $20 million within PRGF, approved in 2004.
Lynn said that only liability, remained to fulfill by Georgia in framework of PRGF, is legal amendments regarding “fit and proper” requirements for bank managers and owners. He urged to hasten the consideration of the draft, already passed to the Parliament.
As it is stressed in the concluding statement of the mission, Georgias strong economic growth is being driven mainly by foreign direct investments. However, while the inflows of capital “signal private sector confidence in the Georgian economy, they also give rise to macroeconomic imbalances”. Correspondingly, current account deficit of Georgia considerably increased in 2006. According to forecast, it should reach to 20% of GDP in 2007, IMF experts warn.
Concerning to it, Lynn indicated again, that the government should to keep inflation on single-digit level, to tough fiscal policy and not to increase budgetary expenses.