International Monetary Fund mission has completed its visit to Georgia. The Fund states that in 2017, economic activity in the country was higher than expected. Presumably, the growth was 4,8%, which was facilitated by increase of consumption and external demand.
“The increase of export, tourism and money transfers made possible the strengthening of economic activity and reduction of current account deficit GDP to 7% (as of three quarters of 2017). In 2017, inflation exceeded the target rate and made 6,7%, which resulted mainly from fuel and tobacco excise duty rate increase. In response to the excess of inflation expectations of the end of the year, in December, National Bank of Georgia increased the policy rate by 25 basis points up to 7¼%. In January 2018, annual inflation rate reduced to 4,3%, as was expected,” – reads the IMF press release. Besides, the Fund states that according to preliminary data, fiscal indicators are better than expected. Fiscal deficit (according to IMF program definition) was 2,9% of GDP, which was ½% better than expected.
Income increase was preconditioned by surplus incomes generated from various taxes. Current expenses were limited and state capital expenses increased. For the future, limitation of current expenses and income mobilization will be of critical importance for state capital investments and reduction of infrastructural challenges.
The IMF mission discussed with the government the progress of structural reforms that will facilitate sustainable and more inclusive growth. Georgian government made steps towards facilitation of strengthening of the Georgian Revenue Service, development of capital markets refining financial safety systems; draft laws on public-private partnership and pension reforms have been submitted to the parliament. Existing positive trends of economic growth allow for mobilization of local savings, increase of private investments and diversification of economy. These reforms are needed to facilitate mid-term growth, create jobs and improve the quality of life,” – IMF states.
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