Jihad Azour, Director of the Middle East and Central Asia Department, IMF responds to BMG's question regarding the restoration of the suspended program by the International Monetary Fund (IMF) in Georgia.
Azour explains, that the Fund wishes to see central bank’s independence in Georgia and its partner countries, as this is crucial for the effective implementation of monetary policy. Azur says that during the previous crises of Georgia, the independence of the Central Bank helped a lot, when the adopted decisions led to a decrease in the inflation rate. Therefore, the main issue for the renewal of the IMF program is the independence of the NBG.
“As I mentioned earlier, independence of central banks is an important piece in the credibility of monetary policy. Central Banks’ independence has served Georgia well over the last few years in dealing with several shocks and also in maintaining the monetary policy anchored and we saw the result with the sharp decline of inflation in this year. This is something that applies for Georgia as well as also for many other countries in the region, as the independence of the Central Bank allows the credibility of the decisions and the determination of the target of the monetary policy, especially in the conditions where there is a high dollarization of the economy.
All these elements are important features to preserve macroeconomic stability and increase reliability of monetary policy rate. This reliability is important not only for achieving the objectives of the monetary policy, but also for increasing the country's investment attractiveness, so that foreign banks can enter and start their activities as well”, - Jihad Azour, Director of the Middle East and Central Asia Department, IMF said.
On October 4, the IMF has said that the IMF-supported stand-by arrangement with Georgia is delayed rather than suspended. According to the IMF, the approval of the second review has been delayed due to the IMF’s disapproval of the change in the management structure and the recent decision on amendments to the sanctions regulations of the National Bank of Georgia (NBG).
On September 19, the National Bank of Georgia announced that by the decision of the Bank’s Acting President, international sanctions will not apply to a Georgian citizen who has not been found guilty by a Georgian court. With this change, the National Bank of Georgia reversed its prior decision and restored access to bank assets and the right to carry out financial transactions to Otar Partskhaladze, after he was sanctioned by the United States Treasury Department.
