17.01.2024 (Caucasian Journal) Our guest today is Andrew JEWELL, Resident Representative for Georgia at International Monetary Fund (IMF).
▶ ქართულად: Read the Georgian version here.
Alexander KAFFKA, editor-in-chief of Caucasian Journal: Dear Andrew, happy New Year, and welcome to Caucasian Journal! Thank you for finding time for our readers in your busy schedule. You were appointed IMF Representative in Georgia last August, but your previous place of work was Bosnia and Herzegovina – not too far from this region. Do you still feel “new” to Georgia?
Andrew JEWELL: Although a lot has happened since I arrived, I still feel quite new. Besides getting up to speed on economic issues, I’m trying to better understand Georgia’s history, the political dynamics in the country, and the geopolitical context. I’m also trying to learn Georgian language, which I find fascinating and very difficult!
AK: Indeed it is... With diplomas from Johns Hopkins School of Advanced International Studies and Sorbonne, and many years with IMF, you have a unique combination of knowledge – from computer science to political science to global finance. Can you tell a little bit about yourself, and your professional interests? And how did you get to Georgia?
AJ: You could say I followed an unconventional path to becoming an IMF resident representative. I started my career as a computer programmer in Washington, but I quickly lost interest and moved to Paris to become a nanny! Looking back, I’m surprised my parents didn’t try to dissuade me. After three years studying French, I returned to Washington and earned a master’s degree in international relations and economics. My first job after graduate school was with the Federal Reserve Bank of New York (a branch of the US central bank), where I followed global financial markets. This was during the time of the Asian financial crisis and the birth of the euro. From New York I moved back to Washington and spent 10 years at the US Treasury Department (the US ministry of finance). I thought I would stay at Treasury until retirement, but in 2010 I was offered a position at the IMF and decided to take it. I’ve been at the IMF ever since. Prior to coming to Georgia, I was the resident representative for Bosnia and Herzegovina – an experience that my family and I enjoyed immensely. When my term ended last year, I was eager to stay overseas and was fortunate to land the Georgia resident representative assignment.
AK: Can you name, say, three things in Georgia which you find similar to the South Balkans? Or, what do you find strikingly different? Generally, how helpful for your current work is your past IMF experience gained in the former Yugoslavia countries?
AJ: Georgia, like several countries in the former Yugoslavia, aspires to join the European Union. It also faces similar challenges – for example, reforming state-owned enterprises and adapting to climate change. Geographically, Georgia reminds me of Bosnia in the sense that you can be in the mountains one day and on the beach the next. Linguistically, I was surprised to learn that some of the grammatical cases that I struggled to master when studying Bosnian language (e.g., dative, vocative, instrumental) are also present in Georgian!
One thing my experience in the former Yugoslavia taught me was the importance of understanding political economy. There is usually a gap between the best economic policies in theory and what is feasible politically. In Bosnia, I sometimes felt I was more of a political scientist than an economist. I suspect my experience there will serve me well in Georgia.
One of the biggest challenges the international community faced in Bosnia was corruption. I came to the conclusion that rooting out corruption would take generations. When I started working on Georgia, I was amazed to learn that this country managed to drastically reduce corruption in public services in just a few years. I did not think this was possible.
AK: Though your exposure to Georgia has still been comparatively brief, it seems it was eventful. The first thing that comes to one’s mind is the case with U.S. sanctions and Georgian National Bank’s position. In September, the National Bank issued an exemption rule for the enforcement of international financial sanctions, according to which the sanctions could apply on Georgian citizens only upon approval of Georgian courts. IMF was quite involved in that situation. Would you like to share any impressions from that time, or any other moments?
The NBG’s decision to change its sanctions regulation in September resulted in further delays to program reviews. We have conveyed these concerns to the authorities and have asked them to take remedial measures.
AJ: We raised three concerns in response to the NBG’s decision to amend its sanctions regulations. First, we were not consulted. Under Georgia’s IMF program, the authorities have an obligation to consult us on policy decisions that affect program objectives. Second, the amended regulations introduced uncertainty into the financial sector. Third, the sudden change in policy in our view damaged the NBG’s credibility and called into question its independence. We have been in discussions with the NBG about possible ways to address these concerns.
AK: What’s the current state of the IMF’s financial assistance program in Georgia? Last fall it was suspended in connection with the above-mentioned collision. If I am correct, the program in question is a three-year $280 million financial support arrangement, approved in June 2020 – quite a considerable piece of financing for this country.
AJ: Indeed, a three-year, $280 million Stand-By Arrangement was approved in June 2022. However, the authorities have been treating the program as “precautionary,” which means they do not intend to draw on the available financing. Rather, they are using the program to signal their commitment to credible policies. The first review of the program was approved in December 2022. The second review, however, was postponed after Georgia’s parliament amended the central bank law last June to create a first deputy governor position – a move which we felt weakened the NBG’s governance structure and undermined its independence. The NBG’s decision to change its sanctions regulation in September resulted in further delays to program reviews. We have conveyed these concerns to the authorities and have asked them to take remedial measures. In the meantime, we are planning to conduct what we call an Article IV consultation in March. This will not be a program review mission but rather a regular economic checkup of the sort that we do for all IMF member countries.
AK: Can you share which projects in Georgia had suffered the most from this?
AJ: Unlike other international financial institutions operating in Georgia, such as the World Bank, the Asian Development Bank, and European Bank for Reconstruction and Development, the IMF does not provide financing for projects. Instead, the money we lend to Georgia adds to the stock of international reserves at the NBG. However, since the authorities are treating the current program as precautionary, no money has been disbursed to date.
AK: May I ask you to share your views regarding the future perspective of financial assistance to Georgia? Is there light at the end of the tunnel, what are the prerequisites, and possible timeline?
AJ: As I mentioned, we have conveyed to the authorities our concerns about the NBG’s governance and independence, and we have asked them to take remedial measures. We would also like to see more progress toward reforming state-owned enterprises, in line with the authorities’ commitments under the program. Ultimately, it is up to the IMF’s Executive Board to decide whether Georgia’s performance under the program is satisfactory. The good news is that the macroeconomic situation remains positive overall: growth is strong, inflation has declined sharply, the fiscal deficit has narrowed, and the banking sector is healthy.
AK: Are there any specific IMF activities or directions that you want to mention?
AJ: As discussed earlier, the IMF does not provide project financing. However, to help the authorities achieve their objectives under the program, we provide considerable technical assistance, including in the areas of tax policy, public financial management, central bank operations, and economic statistics.
AK: What are your expectations for 2024 – and what do you want to happen? Your professional recommendations, perhaps?
AJ: Of course, we would like to see the program back on track. Whether this happens I cannot predict. It depends on macroeconomic outcomes and the authorities’ commitment to reforms.
When a colleague in Washington learned last summer about my new assignment, she texted me and wrote: “Congratulations on getting the best job at the IMF!”
AK: My last question concerns the EU candidate status that has been approved for Georgia. If we consider the coming period as a time of new opportunities, what needs to be done to make the best use of them?
AJ: First, I would like to congratulate Georgia on being granted candidate status! In my limited time here, I’ve been struck by how pro-European this country is. Many Georgians have told me they believe their future lies in Europe, and you certainly see this sentiment in the polling data. When it comes to economic reforms, the IMF has a regular dialogue with EU institutions. In my experience, there tends to be quite a bit of overlap between what we recommend and what the EU recommends. Therefore, progress along the EU path typically entails reforms that the IMF welcomes.
AK: If there is anything that you would like to add for our readers, the floor is yours.
AJ: I would like to say that it’s a privilege for me to be the IMF’s resident representative for Georgia. When a colleague in Washington learned last summer about my new assignment, she texted me and wrote: “Congratulations on getting the best job at the IMF!” I’m excited to be in Georgia at a pivotal moment in the country’s history, and I hope to play a role in promoting macroeconomic stability and sustainable economic growth. Finally, I would like to encourage your readers to reach out to my office if they have any questions about the IMF, or if they have any concerns they wish to raise.
AK: Thank you very much, we wish the best of luck to your work in Georgia.
Read the Georgian language version here.
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