The International Monetary Fund recommended the Georgian government to reduce capital spending, including in wages of officials.
According to the First Review of the Extended Arrangement under the Extended Fund Facility for Georgia, Georgia’s economic recovery is gaining momentum, inflation is projected to decline starting in early 2018, and the external position has strengthened.
While highlighting Georgia’s achievements in its economic performance and banking sector developments, the IMF review warns that despite the positive outcomes, the authorities need to remain vigilant and sustain reform efforts to address structural obstacles to growth.
The 2018 budget envisages a further decline in the deficit while allowing for an increase in capital spending. To achieve this, efforts to strengthen revenue administration should continue, especially to prevent the buildup of VAT claims. The authorities should also bolster efforts to further contain current spending, for instance, by containing the wage bill, improving the targeting of social programs, and reducing subsidies and equity injections to state-owned enterprises," the IMF said in a review.
"Foreign exchange intervention should remain limited to smoothing excessive exchange rate volatility and building reserves. The National Bank of Georgia's steps to strengthen liquidity management, de-dollarise the economy, and improve communication will help strengthen the monetary framework," the IMF added.
