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“The NBG [central bank] has also taken several measures to support economic activity and financial stability, including lowering the policy rate. At the onset of the COVID-19 shock, the NBG eased capital and regulatory requirements, provided lari and FX liquidity, and preemptively requested additional provisioning for banks. In response to declining economic activity and easing inflation pressures, the NBG appropriately reduced its policy rate,” the Fund commented.
The National Bank of Georgia on September 16 kept its key rate at 8.00%. “Maintaining exchange rate flexibility remains important for managing shocks,” the IMF said.
“Structural reforms remain necessary to [...] promote higher and more inclusive growth.”
An IMF team completed discussions in Tbilisi on April 13 on the Sixth Review and on the augmentation of access under the Extended Fund Facility (EFF), reaching a staff-level agreement on a financing tranche of $200mn under the EFF plus $375mn of proposed financing augmentation—both approved by the Fund executive board in early May.
3.2 ​Macro outlook
ADB issues revised 2020 GDP forecasting for South Caucasus trio
The Asian Development Bank (ADB) has issued a September update of its GDP expectations for countries including the South Caucasus trio, Azerbaijan, Armenia and Georgia.
In its June prediction, the ADB forecast Azerbaijan’s GDP in coronavirus-afflicted 2020 would contract by 0.1% but it now expects it to shrink 4.3%.
For Armenia, the ADB in June forecast a GDP contraction of 3.5%, but it is now expecting a 4% decline.
The forecast for Georgia remains unchanged, with a 5% GDP reversal expected.
The changed forecasting for inflation can be seen in the second of the ADB tables at the foot of this article.
14​ GEORGIA Country Report ​October 2020 ​ ​www.intellinews.com