TBILISI, November 16 – Georgia’s economy remains strong, but domestic political tensions and deteriorating relations with the European Union could hurt investor confidence, the International Monetary Fund (IMF) has warned.
An IMF mission delivered the assessment after several days of meetings with government officials, the central bank, businesses, civil society groups and development partners.
The Fund said uncertainty around the economic outlook remains high, with one of the risks being the country’s politics. The IMF said increasing domestic tensions and strained relations with the EU could have a negative effect on how investors view Georgia.
Georgia has also benefited in recent years from financial and migration flows linked to the war in Ukraine. The IMF said an end to the war could improve regional stability and trade prospects, but could also reverse some of those flows.
At the same time, the Fund said large investment projects could also contribute to the economy.
On the positive side, the IMF noted Georgia’s prudent fiscal policy and said public debt is expected to continue falling. Another observation made, was that the country’s financial sector remains healthy, with well-capitalized and profitable banks and low levels of overdue loans.
But when it comes to the risks, the Fund’s assessment pointed out that employment remains low compared with similar countries, despite recent improvements in the labor market. The IMF said better vocational education and employment services could help more people move into higher-productivity jobs.
It also warned that Georgia’s continued heavy use of foreign currencies remains a financial vulnerability, particularly as foreign-currency lending, including mortgages, has recently increased.
The IMF’s team visited Georgia from November 9 to 13. A more extensive review of Georgia’s economy is expected next spring.
