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Will Georgia pass another IMF’s exam?2010-02-11 23:03
The International Monetary Fund mission representatives have completed their work in Georgia in the context of the preparation of the Stand-By Arragement program fifth summary. While staying in the Georgian capital, they have held several meetings with the government representatives and the prime minister, as well as the meetings in the National Bank and Ministry of Finance. The conclusions made by IMF will enable to answer the basic question: will the Georgian economy receive more support and the country will go on increasing its foreign debt, or will Tbilisi have to find the way out of the crisis without IMF's help.
Georgia became member of the International Monetary Fund in 1992, while in four years the republic was provided with soft loans to the amount of 110 million dollars. In 1996, Tbilisi and IMF concluded an agreement on the mechanism of the structural reorganization extended credit activities, according to which the country received another 246 million dollars within the next three years in the form of separate tranches, as Polpred.com reported.
IMF continued sponsoring the post-Soviet republic until the end of the 90s; in their reports, the Fund experts noted the successfully conducted reforms which enabled to bring down the inflation and provide the economic growth. The Georgian GDP grew by 11 percent. Moreover, during these years the republic held successful transformations in the field of privatization of the farmland and enterprises, in banking sector and social defense system reorganization, as well as in the development of the market economy legal basis.
However, afterwards, the relationship between Tbilisi and IMF went wrong. In 1998, Georgia failed to fulfill a number of the experts' recommendations, which resulted in the suspension of another 80-million-dollars credit. As it turned out, the possible refusal of the foundation became the best motivation for the government: within a short period of time the import allowances were decreased, significant success was achieved in the banking sector, and the republic solved the problem of restructuring the foreign debt.
Ultimately, Tbilisi received the money but the situation complicated the country's joint affairs with IMF. Until the world financial crisis, Georgia has been failing to fulfill some of the demands and exceeded the set limit of expenses from time to time.