FYI

Sent from Mail for Windows 10

Dear Ministers and Governor, Dear Natia, Ivane, and Koba -

I hope this e-mail finds you well during these rather stressful times, and in good health!

I’m writing to again express the readiness of the World Bank Group to support the Government of Georgia in its efforts to mitigate the impact of the COVID-19 pandemic.

Allow me to start by congratulating you on the rapid response of the government so far, including in your efforts to contain the spread of the virus, but also for the speed and robustness of the policy response to mitigate the negative economic shocks.  As you may have seen, I have given several interviews lauding government efforts to help build trust and calm popular sentiment.  The epidemiological impact and economic trade-off is absolutely central and a terrible dilemma, and yet with the information currently available, it appears that that those countries that go early and decisively against COVID-19 do seem to have better economic outcomes, though we still have to see what happens when economies return to their “steady-state”. 

The repercussions of the COVID-19 crisis will of course be significant.  While we anticipate the impact from exposure to China to be relatively low (also because the Chinese economy appears to already be picking up pace), the spread of the virus to Europe and Georgia’s neighbors will strongly impact Georgia’s economy.  As you know, the main transmission channels are likely to be the tourism industry, commodity prices, as well as remittances.  Efforts to contain the spread of the virus (“social distancing”) can further dampen sentiments and economic activity.  While there is great uncertainty, in a benign scenario (recovery starting in mid-April), our estimates put growth down to 3.5% this year; however, this could plummet to 2.5% in case the outbreak is extended to mid-2020.  Our economic team has been in touch with your colleagues in various agencies and, broadly speaking, there appears to be consensus on the above.  Such a sharp drop in economic activity is likely to also have a negative impact on poverty reduction and calls for stepped up support from development partners.

To be helpful, here are three concrete initiatives that we hope will be of use to you and the Government of Georgia:

1. As a start, allow me to reiterate that you are eligible to access the World Bank Group $12bn Fast Track COVID-19 Facility, for which an allocation of around $20 million can be made available for rapid response and which can be largely used to help the health sector respond to the pandemic.  In addition, I would like to stress that we could mobilize significant additional funds and re-visit our CPF lending envelope, prioritizing interventions to help mitigate the health and economic impact of the pandemic, again, which we would fast track to ensure for a swift response. This could help address the balance of payments you are discussing with the IMF.

2. Next, we stand ready to provide analytical advice and technical assistance, and I would like to share with you a few documents describing policies undertaken by other governments in dealing with the pandemic.  The measures included are not exhaustive and do not reflect the views of the World Bank Group; however, could help you in the thinking and designing your policy response. More specifically, I’m including: (i) a table with country-level economic interventions; as well as two briefs on (ii) policy responses in the education and (iii) social protection sectors.

3. Finally, the World Bank is exploring the option of us engaging directly with key global suppliers for health equipment/ supplies – if you as our country clients were to request it – and serving as a procurement agent. The early thinking on this is that the World Bank would then aggregate demand across countries, find supplies, and negotiate the arrangement for our clients, likely on a direct source basis/accessing UN stocks/accessing bulk supply from another Government source that has excess supply.  

In conclusion, allow me state that I’m confident that Georgia will overcome the hardships and come out stronger from this crisis, and reiterate the readiness of the World Bank to step up our support to Georgia in these challenging times.

With best and kind regards,