TBILISI, Aug 9, (Reuter) - A senior International Monetary
Fund (IMF) official praised on Friday Georgia's market reforms
and said the government was meeting targets for continued
borrowing from the organisation.
Mohammed Shadman Valavi, head of the southern division of
the IMF's second European department, told reporters the small
Transcaucasian country was exceeding government targets for
reducing inflation and holding down the budget deficit.
``Georgia has made significant progress in the process of
carrying out economic reforms,'' Valavi said as he concluded a
two-week visit to the mountainous former Soviet republic of five
million people.
Georgia is due to receive a second tranche of $40 million
under the IMF Enhanced Structural Adjustment Facility (ESAF)
programme in the next few months and Valavi said he saw no
reason why the loan could not go ahead. Some $41 million has
already been disbursed out of a planned total of $246 million.
``Although the conditions of the agreement between the IMF
and Georgia for receiving the second tranche have not been
fulfilled in a literal sense, we have come to the conclusion
that the spirit of reforms has made progress,'' he said.
Valavi cited the government's success in holding inflation
at nine percent over the first seven months of this year against
a government target of 13 percent.
He also praised the stability of the country's new lari
currency, which has remained steady at about 1.25 to the dollar
in almost a year since it was introduced. A $60 million IMF
stabilisation fund has contributed to its solid performance.
The government budget deficit is also running at less than
had been projected and GDP was 16.6 percent higher in the first
six months of this year than in the same period of 1995.
Valavi said during the course of his visit much more needed
to be done to increase tax collection and he criticised moves to
give tax breaks to certain sectors of the economy.