TBILISI

The International Monetary Fund (IMF) said that significant risks, including slow vaccination, remained to Georgia’s economic recovery.

Georgia’s highly tourism-reliant economy has been hit especially hard by the COVID crisis and lacks the resource-extraction or manufacturing base that has helped cushion the blow in some other ex-Soviet countries.

The country started economic recovery in April when it recorded 44.8 percent year-on-year growth. Economic recovery continued to gather pace as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, businesses reopened and tourists tentatively started to return.

Georgia’s gross domestic product (GDP) grew by 12.2 percent year-on-year in January-July after contracting 5.8 percent in the same period last year.

Georgia revised its economic growth forecast to 7.7 percent from a previous projection of 4.3 percent in 2021 amid signs of economic recovery and in line with the IMF current projection.

“Significant risks remain and contribute to an outlook that is more uncertain than usual, IMF said in a statement. Chief among risks, COVID-19 variants or vaccination delays could derail the recovery by requiring new lockdowns and reducing external demand.”

The Fund said that the authorities’ macroprudential toolkit is comprehensive and includes measures to address the key risk from high dollarisation, which complicates monetary policy and exposes Georgia’s banks to credit risk from exchange rate shocks.

“These measures also aim to limit bank risks and reduce incentives for lending in foreign currency. Over the medium term, the authorities should consider tightening de-dollarization measures gradually, with the choice of measures and calibration informed by impact assessments,” IMF said.

In April, the IMF approved the disbursement of $111 million to Georgia under its Extended Fund Facility (EFF) to support the ex-Soviet country’s economy and help it to strengthen resilience to shocks.

The IMF said that allocation of the tranche would bring total disbursements under a three-year programme to $687 million.

In August, Fitch Ratings revised the outlook on Georgia’s long-term foreign-currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDR at ‘BB’.