“Georgia’s financial sector is in good condition,” states a report by the International Monetary Fund (IMF).

“Fiscal policy is well-calibrated, and efforts should focus on strengthening revenue mobilization and improving expenditure efficiency. Public debt remains at a reasonable level. Revenue mobilization should be achieved through tax policy and administration reforms that expand the tax base and optimize tax expenditures. Expenditure efficiency can be enhanced by better implementing public investment management processes and reviewing expenditures. Social assistance should be better targeted toward the most vulnerable households, alongside efforts to improve public works programs and promote employment,” the report states.

The IMF report notes that “the financial sector is in good condition, and reforms are progressing.”

“However, further steps are needed to enhance resilience and address risks. Continued efforts are required to further reduce dollarization, as well as to monitor the rapid growth of consumer loans and lari-based financing. Competition in the financial services sector should be improved, including through open banking practices,” the report states.

According to the document, “structural reforms are necessary to strengthen Georgia’s growth potential and support inclusive job growth.”

“Key priorities include addressing high structural unemployment, low agricultural productivity, and skills shortages through improved vocational training, enhanced teacher quality, and targeted agricultural support. Although Georgia outperforms many peer countries in various governance indicators, recent backsliding underscores the need to strengthen judicial independence, expand the capabilities of the anti-corruption bureau, and effectively implement property declaration reforms,” the report states.

Additionally, considering domestic and global challenges, the IMF’s Executive Board states that the National Bank of Georgia should maintain a broadly neutral policy stance while remaining flexible and data-driven.

“The current stance is appropriate. However, rising global uncertainty and local food price increases call for a cautious approach to further easing. Priority should be given to opportunistically accumulating reserves while maintaining exchange rate flexibility. The National Bank of Georgia should avoid actions that could undermine policy transmission and credibility,” the document notes.

According to the IMF Executive Board’s assessment, strengthening the governance and independence of the National Bank remains a key priority.

“Progress has been observed in implementing past recommendations, including filling vacant board positions and appointing a governor. However, proposed amendments to the National Bank of Georgia Law to enhance governance and financial autonomy remain unfulfilled. Reforms should ensure a majority of non-executive board members, limit discretionary financial transfers to the government, further clarify governor succession rules, and strengthen the qualifications of board members,” the report states.