An International Monetary Fund (IMF) mission, led by Mr. Edward Gardner, visited Tbilisi from April 13 to 28 for discussions on the ninth and final review of the economic program supported by a Stand-By Arrangement (SBA). The SBA with Georgia was approved on September 15, 2008 (see Press Release No. 08/208) for an amount of SDR 477.1 million (about US$774 million). On August 6, 2009, the size of the financial package provided under the SBA was increased to SDR 747.1 million (about US$1,213 million) and the SBA was extended to June 14, 2011 (see Press Release No. 09/277).

The IMF mission reached a staff-level agreement to conclude the ninth and final review under the SBA. The agreement will be subject to approval by IMF management and the Executive Board. The Executive Board is expected to consider Georgia’s request for completion of the ninth review under the SBA in early June. Completion of the review would make available to Georgia the last tranche under the SBA (about $114 million).

At the end of the mission, Mr. Gardner issued the following statement in Tbilisi:

“The mission confirms its earlier forecast of real GDP growth of 5½ percent for 2011. It expects that inflation will start abating in the second half of the year, as food and energy prices begin to stabilize. On this basis, the mission projects inflation to come down from 14 percent in March to 8½ percent by the end of 2011 and to decline further thereafter consistent with the National Bank’s medium term inflation objective. It also notes that core inflation (i.e., inflation excluding fuel and food prices) remains subdued at 2 percent in March. The mission considers that the monetary policy stance is appropriate and consistent with the projected decline of inflation.

“Balance of payments developments have been better than anticipated. Strong export performance, including tourism, and higher private financial inflows should more than offset the impact of higher import prices on the balance of payments. As a result, the mission expects that the net international reserve position of the National Bank of Georgia will improve in 2011 more markedly than originally anticipated.

“The government deficit (as defined in the IMF program) is projected to decline to 3.6 percent of GDP in 2011, from 6.6 percent of GDP in 2010. This sizable improvement reflects ongoing efforts to contain spending and improved revenue performance.

“The very successful $500 million Eurobond issue and buyback of April 2011 attest to a significant strengthening of investor confidence. The operation eases considerably the external debt rollover hump of 2013.”