Press Release No. 05/140

Press Release: Statement by IMF Managing Director Rodrigo de Rato at the Conclusion of His Visit to Georgia

June 13, 2005

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Tbilisi at the conclusion of his visit to Georgia, where he participated in an IMF/WB Constituency Meeting and held meetings with the Georgian authorities:

"I am delighted to be in Georgia for the first time. The purpose of my visit was to attend the annual meeting of a group of 12 countries, including Georgia, that work together at the Executive Boards of the IMF and the World Bank. But I have also met the Georgian authorities and reviewed the impressive progress they have achieved since taking office in early 2004.

"I have had the privilege to meet President and Prime Minister. I have also met the Speaker of Parliament, Finance Minister, the President of the National Bank of Georgia, and representatives of civil society. We have had very productive discussions, and I would like to thank the Georgian authorities for their warm welcome and the excellent arrangements they made for this event.

"Since the Rose Revolution in November 2003, the government has accelerated the transition to an open, market-based economy, most visibly in the reform of the tax code, the privatization drive, and supporting steps to improve the business climate. Turning around the fiscal position was a remarkable success. More broadly, Georgia is on a promising path toward sustained growth and the alleviation of poverty. The IMF has supported these efforts early on, and it will continue to assist Georgia with policy and technical advice, as well as financial support.

"I am very pleased about the positive outcome of the recent IMF mission, which has reached an agreement in principle with the authorities on an economic program in 2005. Board approval of the program would release a US$21 million IMF disbursement to Georgia.

"Putting Georgia's economy on a sound footing will require perseverance and a broad social consensus in the coming years. The government's strong program ownership is a key pillar of this effort; another pillar - support from the international community has also been clearly demonstrated.

"More immediately, the government faces a number of challenges, in addressing priority spending needs using sizeable privatization receipts and external grants, while safeguarding macro stability and longer-term fiscal sustainability.

"Georgia has taken important steps to modernize its financial system. I would encourage the monetary authorities to consolidate these gains, especially by continuing to strengthen financial sector supervision, fostering a competitive environment in the sector, and deepening and broadening financial markets. The central bank should also continue to enhance its monetary control instruments, which would be key as it seeks to improve liquidity management.

"The current government has also launched important reforms, ultimately geared to increasing productivity and enhancing social protection. I am, again, impressed by the achievements made in this short period, and would encourage the government to persevere with its efforts. It would be important, especially, to make further strides to improve the physical and financial situation of the energy sector; continue with transparent privatizations; simplify licensing and eliminate red-tape; deepen the civil service reform; and introduce targeted poverty benefits.

"To conclude, the IMF stands ready to assist Georgia in implementing its reform agenda and I wish them success in this endeavor."