4 Jun 2024 16:48

IMF appoints new head of mission in Tbilisi, Georgian govt initiating resumption of financing program

TBILISI. June 4 (Interfax) - The International Monetary Fund (IMF) has appointed Alejandro Hajdenberg the new chief of its mission to Georgia, and he has met with the National Bank of Georgia (NBG) governor and the Georgian finance minister, while the country is seeking to have a Stand-By Arrangement resumed after it was suspended last summer.

"Natia Turnava, the Acting Governor of the National Bank of Georgia, held an introductory meeting with Alejandro Hajdenberg, the new Mission Chief of the International Monetary Fund (IMF). [...] The importance of cooperation with the IMF was a key topic, with a review of the details for activating an IMF program in Georgia," the NBG said in a statement.

The negotiations focused on low inflation (2% in January-May 2024), robust capital buffers in the financial sector, and a high asset quality, it said.

"We had a productive discussion with the new Chief of the IMF Mission," the statement quoted Turnava as saying after the meeting. "We presented Georgia's strong macroeconomic situation, our inflation-targeting framework, the policy of strengthening foreign exchange buffers, and the ongoing structural reforms. I'm pleased that the IMF mission positively evaluated the NBG's policies and the steps we've taken," she said.

"Alejandro Hajdenberg echoed the positive sentiment, commending Georgia's strong macroeconomic performance. He highlighted the country's low inflation, improved current account balance, and the successful implementation of reforms that have driven progress," the NBG said.

The Georgian Finance Ministry said its head, Lasha Khutsishvili, also had an introductory meeting with Hajdenberg, at which the parties "expressed their willingness to continue cooperation involving the International Monetary Fund to secure Georgia's macroeconomic and financial stability."

The Georgian government and the IMF agreed on a three-year $289 million Stand-By Arrangement in April 2022, after which the IMF issued the first $40 million tranche. Negotiations on a second tranche began in May 2023. However, the IMF suspended further negotiations in July over disagreements regarding changes in the NBG's structure.

The Georgian parliament passed legislation On the National Bank in February 2023, which President Salome Zourabichvili vetoed, arguing that the law undermined the NBG's independence and amended banking sanction rules. However, the country's parliament overrode the presidential veto and endorsed the amendments on June 20, 2023, which prompted three NBG deputy governors to resign simultaneously.

IMF Resident Representative in Georgia Andrew Jewell said in March 2024 that the suspended IMF financing program for Georgia could be phased out as there was not enough time for negotiations on its resumption. Jewell said, however, that the IMF could negotiate a new program with the Georgian government.