The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Georgia today. The authorities have consented to the publication of the Staff Report prepared for this consultation.

"Georgia`s economy has remained resilient amid heightened global uncertainty, including from the war in the Middle East. Real GDP expanded by 7.5 percent in 2025 and remained strong in early 2026, while inflation rose above target due to higher energy prices, reaching 5.9 percent in April 2026. Fiscal and external buffers have strengthened, with reserves reaching the IMF’s adequacy threshold and public debt declining below 35 percent of GDP.

Assuming the Middle East war is resolved soon, growth is projected to moderate to 6.5 percent in 2026, gradually converging to its medium-term potential rate of 5 percent by 2028. Inflation is expected to return to target by mid-2027 and public debt to remain near current levels with continued prudent monetary and fiscal policies.

Amid elevated uncertainty and recurring external shocks, policy priorities include bringing inflation back to target, building further reserve buffers, and advancing structural reforms to sustain strong growth and create more jobs.

Executive Board Assessment

Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities for their good macroeconomic performance, underpinned by sound macroeconomic management, strong growth, improved fiscal and external buffers, and a sound financial sector. They, however, noted that inflation has risen above target, reflecting factors including the conflict in the Middle East, while structural challenges persist. Against the backdrop of elevated global uncertainty, Directors underscored the importance of preserving macroeconomic stability while advancing reforms to sustain growth and spur job creation.

Directors considered the recent policy rate hike appropriate and emphasized that monetary policy should remain appropriately tight and data‑dependent to bring inflation durably back to target. They underscored the importance of preserving exchange rate flexibility as a shock absorber, and accumulating reserves as conditions allow. Directors supported further steps to strengthen the governance framework of the NBG to reinforce institutional credibility and policymaking, in line with international best practices.

Directors welcomed the authorities’ commitment to fiscal discipline and agreed that medium‑term fiscal plans remain appropriate to keep public debt at prudent levels. They emphasized the need to streamline tax expenditures, strengthen mining taxation and further improve tax administration, while enhancing spending efficiency to create room for priority spending. Directors concurred that targeted support should be provided to vulnerable groups if downside risks materialize. They also called for advancing state‑owned enterprise governance reforms to reduce fiscal risks.

Directors welcomed the resilience of the banking system. They called for continued vigilance amid evolving risks, including rapid credit growth, unhedged foreign exchange exposures, non‑bank financial activities, and digital assets. Directors encouraged further efforts on bank resolution and crisis management arrangements, consolidated supervision, and digital‑asset oversight.

Directors emphasized the need to address longstanding structural constraints to sustained inclusive growth and job creation. They encouraged reforms to address high youth unemployment, persistent skills mismatches, and weak work incentives, including strengthening vocational education and public employment services, better aligning social assistance with work incentives, and supporting high‑productivity sectors. Directors supported continued investment in logistics, trade facilitation, infrastructure, and deeper regional integration to strengthen competitiveness. They stressed the need to strengthen anti‑corruption and judicial institutions, while maintaining a predictable market‑friendly policy environment.

It is expected that the next Article IV consultation with Georgia will be held on the standard 12‑month cycle", - reads the report.