Page 14 - GEORptJul18

European Parliament approves €45mn in macroeconomic support for Georgia
The European Parliament on March 15 endorsed a proposal by the European Commission to provide €45mn in macroeconomic assistance to Georgia as part of its assistance for the period 2017-2020. The support comprises of €35mn in medium-term loans and €10mn in grants.
In a statement, the office of the Eastern Partnership and Russia Unit at the European Parliament noted that Georgia's macroeconomic outlook remains worrisome, despite recent improvements. Thus, the country's debt-to-GDP ratio is on the rise due to the sharp depreciation of the local currency, the balance of payments remains fragile due to the high current account deficits that the import-dependent country runs, and the external environment remains weak.
In the same statement, the European Parliament praised the supervisory activities of the Georgian central bank, which, it says, "have warranted that the financial system remains sound and well capitalised overall".
The support will be disbursed in two tranches and is contingent upon Georgia's performance in the areas of democracy, rule of law, human rights, and good governance, the statement concluded.
3.2 Macro outlook
World Bank expects robust growth in the Caucasus through 2020
The economies of the three South Caucasus states, Armenia, Azerbaijan and Georgia, are expected to grow robustly for the next three years, says the World Bank’s latest Global Economic Prospects report, which has lifted the institution's forecasts issued in January for all three countries.
The upward revisions are most comprehensive for Azerbaijan, whose once booming economy is recovering from a contraction caused by low oil prices.
It grew by an estimated 0.1% in 2017 and is expected to accelerate to 1.8% this year and 3.8% in 2019, before moderating to a still healthy 3.2% in 2020. The figures represent upward revisions of 0.9pp, 2.3pp and 0.6pp, respectively, compared to the January forecasts.
“Azerbaijan is projected to emerge from two years of disappointing growth, mainly in response to fiscal stimulus measures supported by higher oil prices and expanded natural gas production,” the development bank commented.
For Armenia, the World Bank confirmed stunning 7.5% growth in 2017, as reported by the finance ministry recently, but expects it to be followed by steadier and more modest expansions of 4.1% this year and 4.0% in each of the following two years. The bank raised its projection for 2018 by 0.3pp but left its forecasts for the next two years unchanged.
Georgia’s economy, meanwhile, will be the fastest growing of the three. It is expected to follow last year’s 5.0% expansion with growth rates of 4.5%, 4.8% and 5.0% in 2018-2020. The bank has raised its forecasts for 2018 and 2019 by 0.3pp and 0.1pp, respectively.
However, the World Bank warns that risks in the Europe and Central Asia region are tilted to the downside. “A disorderly tightening of global financial conditions could trigger a sharp deterioration of external financing conditions
14 GEORGIA Country Report July 2018 www.intellinews.com