WASHINGTON, March 19 (Reuters) - The International Monetary Fund on Friday agreed to disburse $148.7 million to Georgia under the country's IMF loan program and said there were signs the economic recovery was gaining steam.
The IMF said in a statement that a further strengthening of Georgia's economy will require more foreign direct investment and credit growth.
The IMF also changed performance targets for the end of March and June under the country's $1.2 billion program for international reserves, the budget deficit and debt, although it did not go into details.
Georgia's economy contracted by 4 percent in 2009 after the effects of a five-day war with Russia in August 2008 were compounded by the onset of the global financial crisis.
With the economy on the mend, the IMF said Georgia's 2010 economic program would focus on improving the country's fiscal situation, with a focus on 'preserving debt sustainability, macroeconomic stability and facilitating the exit from IMF balance of payments support.'
Naoyuki Shinohara, the IMF's deputy managing director, said containing public spending would cut the fiscal deficit to 7.4 percent of gross domestic product in 2010, down from 9.2 percent in 2009, while protecting social programs.
He said once the recovery firms up and credit constraints ease, some monetary tightening will become needed to preserve disinflation gains.
Shinohara said banks' balance sheet constraints on lending have recently eased in Georgia although banks remain exposed to substantial credit risk from high non-performing loans and currency-induced credit risk.
(Reporting by Lesley Wroughton; Editing by Leslie Adler) Keywords: IMF GEORGIA/ (lesley.wroughton@thomsonreuters.com; Tel: 1-202-898-8317; Reuters Messaging: lesley.wroughton.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The IMF said in a statement that a further strengthening of Georgia's economy will require more foreign direct investment and credit growth.
The IMF also changed performance targets for the end of March and June under the country's $1.2 billion program for international reserves, the budget deficit and debt, although it did not go into details.
Georgia's economy contracted by 4 percent in 2009 after the effects of a five-day war with Russia in August 2008 were compounded by the onset of the global financial crisis.
With the economy on the mend, the IMF said Georgia's 2010 economic program would focus on improving the country's fiscal situation, with a focus on 'preserving debt sustainability, macroeconomic stability and facilitating the exit from IMF balance of payments support.'
Naoyuki Shinohara, the IMF's deputy managing director, said containing public spending would cut the fiscal deficit to 7.4 percent of gross domestic product in 2010, down from 9.2 percent in 2009, while protecting social programs.
He said once the recovery firms up and credit constraints ease, some monetary tightening will become needed to preserve disinflation gains.
Shinohara said banks' balance sheet constraints on lending have recently eased in Georgia although banks remain exposed to substantial credit risk from high non-performing loans and currency-induced credit risk.
(Reporting by Lesley Wroughton; Editing by Leslie Adler) Keywords: IMF GEORGIA/ (lesley.wroughton@thomsonreuters.com; Tel: 1-202-898-8317; Reuters Messaging: lesley.wroughton.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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