The current account deficit is expected to widen to 9.7% of GDP in 2020, from 5.4% in 2019. “The external position has deteriorated as tourism revenues came to a virtual standstill” – the IMF explained, adding that “nevertheless, high remittances and lower imports have contained Georgia’s external financing needs, and gross international reserves remain at comfortable levels thanks to the augmentation under the IMF arrangement and donor financing”.
Going forward, the IMF projects that the shock to tourism is expected to be protracted with tourism receipts assumed to recover to 2019 levels only by 2024. “The current account deficit is projected at 5.5% of GDP by 2025, financed predominantly by FDI. The authorities envisage to use all policy tools available to limit further economic damage if downside risks were to materialize” – reads the statement issued by Mercedes Vera-Martin at the conclusion of a virtual review mission.
