Abstract
Real GDP growth for 2010 has been revised upward to 6.3 percent, and annual CPI inflation has increased to about 10 percent. End-December performance criteria (PC) are expected to be met, with the exception of the fiscal deficit and general government expenditure targets owing to the late disbursement of budget grants and disbursements under a project loan on-lent by the government, which came in earlier than the authorities anticipated. Policies are on track and have broadly delivered on program objectives.
1. The following information has become available since the issuance of the staff report (EBS/10/244). These developments do not change the thrust of the staff appraisal.
Georgia: Quantitative Performance Criteria (PC) and Indicative Targets, 2010
Actual figures and quantitative targets are based on program exchange rates.
The continuous performance criterion for external arrears is defined in paragraph 21 of the TMU.
Actual figures for the NIR and NDA, and projections for all other indicators.
Georgia: Quantitative Performance Criteria (PC) and Indicative Targets, 2010
| Sep-10 | Dec-10 | |||||
|---|---|---|---|---|---|---|
| Performance Criteria | PC | Adjusted PC | Actual | PC | Adjusted PC | Actual/Proj. 3/ |
| (Cumulative change since the beginning of 2010, in millions of lari) | ||||||
| Ceiling on cash deficit of the general government | 867 | 773 | 1,241 | 1,397 | ||
| Ceiling on the general government expenditures | 5,023 | 5,009 | 7,106 | 7,256 | ||
| (End-period stock, in millions of lari) | ||||||
| Ceiling on net domestic assets (NDA) of the NBG 1/ | 506 | 564 | 513 | 714 | 689 | 344 |
| (End-period stock, in millions of U.S. dollars) | ||||||
| Floor on net international reserves (NIR) of the NBG 1/ | 740 | 705 | 708 | 721 | 736 | 885 |
| (Cumulative change since the beginning of 2010, in millions of U.S. dollars) | ||||||
| Ceiling on accumulation of external arrears 2/ | 0 | 0 | 0 | 0 | ||
| Indicative target | Ind. Target | Actual | Ind. Target | Proj. | ||
| (Cumulative change since the beginning of 2010, in millions of U.S. dollars) | ||||||
| Ceiling on contracting or guaranteeing of new total external debt by the public sector | 1,000 | 646 | 1,000 | 692 | ||
Actual figures and quantitative targets are based on program exchange rates.
The continuous performance criterion for external arrears is defined in paragraph 21 of the TMU.
Actual figures for the NIR and NDA, and projections for all other indicators.
Georgia: Quantitative Performance Criteria (PC) and Indicative Targets, 2010
| Sep-10 | Dec-10 | |||||
|---|---|---|---|---|---|---|
| Performance Criteria | PC | Adjusted PC | Actual | PC | Adjusted PC | Actual/Proj. 3/ |
| (Cumulative change since the beginning of 2010, in millions of lari) | ||||||
| Ceiling on cash deficit of the general government | 867 | 773 | 1,241 | 1,397 | ||
| Ceiling on the general government expenditures | 5,023 | 5,009 | 7,106 | 7,256 | ||
| (End-period stock, in millions of lari) | ||||||
| Ceiling on net domestic assets (NDA) of the NBG 1/ | 506 | 564 | 513 | 714 | 689 | 344 |
| (End-period stock, in millions of U.S. dollars) | ||||||
| Floor on net international reserves (NIR) of the NBG 1/ | 740 | 705 | 708 | 721 | 736 | 885 |
| (Cumulative change since the beginning of 2010, in millions of U.S. dollars) | ||||||
| Ceiling on accumulation of external arrears 2/ | 0 | 0 | 0 | 0 | ||
| Indicative target | Ind. Target | Actual | Ind. Target | Proj. | ||
| (Cumulative change since the beginning of 2010, in millions of U.S. dollars) | ||||||
| Ceiling on contracting or guaranteeing of new total external debt by the public sector | 1,000 | 646 | 1,000 | 692 | ||
Actual figures and quantitative targets are based on program exchange rates.
The continuous performance criterion for external arrears is defined in paragraph 21 of the TMU.
Actual figures for the NIR and NDA, and projections for all other indicators.
2. The end-December NDA and NIR PCs were met by even larger margins than anticipated reflecting the absence of seasonal intervention in December, which the central bank had anticipated. The level of new external debt contracted or guaranteed by the public sector is expected to be within the ceiling set as an indicative target.
3. The authorities expect government expenditure at end-December 2010 to be slightly higher, by GEL 24 million (0.1 percent of GDP), than projected in the staff report owing to a faster pace of capital project implementation by local governments. Since this revision reflects changes in the implementation schedule of projects that have been budgeted, it should in principle be offset by lower capital spending in 2011, and therefore not affect the underlying fiscal stance. At the same time, the authorities noted that this is still a projection and therefore subject to possible deviations. In order to cover such uncertainty and minimize the risk of misreporting, staff and the authorities agreed to adjust upward the projected level of spending by a total of GEL 50 million (0.2 percent of GDP) relative to the staff report, as reflected in the above table. Because of better-than-anticipated performance on the revenue side, a similar adjustment is not being sought for the deficit projection. The budget deficit PC is still expected to be missed as set out in the staff report.
4. Real GDP growth was 6.5 percent year-on-year in the first three quarters of 2010, in line with the annual projection of 6.3 percent. CPI inflation reached 11.2 percent at end-2010, fueled by rising food prices.
5. The authorities have indicated that they do not intend to draw under the arrangement at this time, reflecting improved balance of payments conditions, and the fact that gross international reserves are expected to be further boosted by a return to the market in the near future.