Georgia Must Reduce Deficit, Debt to Win Investors, IMF Says

Georgia must reduce its budget deficit and foreign debt to increase investor confidence and cut dependence on international assistance, the International Monetary Fund said.

Economic growth will decelerate to 4.5 percent next year from 6 percent this year as investment slows, Edward Gardner, the IMF’s senior resident representative, said in an interview in Tbilisi today.

“The main policies are reducing the deficit and the foreign debt to give investors confidence in Georgia, attract more investment and reduce” dependence on exports, he said. The year 2013 “is a critical date for Georgia, when there is a $500 million Eurobond due and large repayments” to the IMF, Gardner said.

Georgia may cut the 2011 budget deficit to 4.3 percent of gross domestic product from 6.3 percent this year, Finance Minister Kakha Baindurashvili said in October, mainly on higher tax revenue and an increase in international assistance. The government plans to reduce the deficit to 3 percent in 2013.