Georgia, Tbilisi, April 29 / Trend N.Kirtzkhalia /
The International Monetary Fund (IMF) named several major challenges for the economy of the Caucasus and Central Asia in its Regional Economic Outlook for the Caucasus and Central Asia report released in Tbilisi this week.
"To sustain the recovery, policymakers in the Caucasus and Central Asia will need to address rising inflation, respond to social pressures arising from high food prices without threatening fiscal stability, and restore the health of banking systems," Middle East and Central Asia Department Deputy Director David Owen said.
"At a time of global crisis, Georgia recorded a 9 percent fiscal deficit, which resulted in increased costs. Presently, the fiscal deficit has been adjusted, which is a positive thing. High prices for food and oil may have an impact on any other consumer goods," he said.
Owen said that particular attention should be paid to the issue of inflation.
"The National Bank of Georgia has always placed emphasis on this. But this time it must be especially attentive to this issue so as to prevent a rise in inflation and an increase in prices to an unmanageable level. The conservation of prices for products is of particular importance for Georgia, as well as for many other developing countries and countries in the region, because the share of food in the basket is very high. Prices will have a significant impact on the population, as the country lacks effective systems of pensions and social protection. Moreover, the inflation rate has already reached 14 percent," Owen said.
Owen said the regional countries may face basically two challenges: high food and fuel prices and reduced fiscal deficits.
"Reducing the fiscal deficit is necessary to avoid any debt growth and not facing a service problem. A sustainable economic growth, improving the level of unemployment and equality, is necessary in Georgia so that the low social class can attain a profit from economic advancement," he added.