Georgia’s National Bank president confirms suspension of IMF programme

Georgia’s National Bank president confirms suspension of IMF programme
Earlier this month the central bank controversially decided not to follow international sanctions on Georgian citizens until a verdict is reached by a Georgian court. / bne IntelliNews
By Tornike Mandaria in Tbilisi September 28, 2023

The International Monetary Fund has formally suspended its programme for Georgia after the National Bank of Georgia (NBG) shielded a former official close to oligarch Bidzina Ivanishvili, the ruling Georgian Dream party's founder, from US sanctions.

Natia Turnava, the acting NBG president,  officially confirmed the suspension of the IMF programme during an interview on PalitraNews TV channel. 

Former Prosecutor General Otar Partskhaladze, a Georgian who also has Russian citizenship, has been sanctioned by the US for his business interests in Russia, and the US State Department says he has worked with Russia's FSB spy agency to to influence Georgian politics and society to benefit Russia. Partskhaladze, who has been reportedly convicted of robbery in Germany, is an associate of Ivanishvili, who made his fortune in Russia. 

Earlier this month the central bank controversially decided not to follow international sanctions on Georgian citizens until a verdict is reached by a Georgian court. This meant that individuals sanctioned for their close links to Russia would regain access to their assets in Georgia.

Turnava also acknowledged the IMF's concerns arising from the simultaneous departure of three vice-presidents within the organisation. Turnava's decision to drop the sanctions on Partskhaladze led to the resignation of three of the central bank's vice-presidents. 

President Salome Zurabishvili has called for Turnava's resignation, but Turnava has refused to step down.

Turnava expressed the central bank's commitment to resuming the programme, which had already been effectively halted in the spring of this year when the Georgian Dream government changed the rules governing the central bank to enable her to be appointed.

The original IMF-supported programme included a three-year stand-by arrangement with a $289 million loan. Following the disbursement of the first tranche amounting to $40 million, Georgia was slated to receive the second tranche this summer.
However, the IMF postponed the submission and board approval of the second review of Georgia's stand-by arrangement.  The delay was attributed, in part, to disagreements regarding changes in the NBG's management structure that created a post of first vice-president who would act as president if there was a vacancy.  Turnava, a former economy minister, was then pushed in as first vice-president and thus acting head of the central bank, avoiding any potential obstruction from the president, who has become a firm critic of the government.

In a statement released on July 21, the IMF   highlighted that protecting the NBG's autonomy is vital to continuing the progress of the IMF programme in the country.

The NBG says it aims to address these issues and get the programme back on track.