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Analyzing Balance Sheet Vulnerabilities in a Dollarized Economy: The Case of Georgia

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  • Mr. Andreas Billmeier
  • Mr. Johan Mathisen

Abstract

Balance-sheet analysis (BSA) complements traditional flow-oriented macroeconomic analysis by gauging mismatches in aggregate and sectoral balance sheets of an economy. Enabled by recent progress in data availability, this paper applies BSA to Georgia, focusing on currency mismatches. In reviewing developments over the last five years, the paper finds that the still-high level of dollarization continues to create financial vulnerabilities, but that the overall level of currency mismatch has fallen and that liquidity problems are unlikely, in part owing to a strengthening of sectoral buffers, hedges, and insurance against shocks. Policy recommendations include accumulating reserves, strengthening securities markets, enhancing banking supervision, and maintaining a flexible exchange rate.

Suggested Citation

  • Mr. Andreas Billmeier & Mr. Johan Mathisen, 2006. "Analyzing Balance Sheet Vulnerabilities in a Dollarized Economy: The Case of Georgia," IMF Working Papers 2006/173, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2006/173
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    References listed on IDEAS

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    1. International Monetary Fund, 2004. "Thailand: Selected Issues," IMF Staff Country Reports 2004/001, International Monetary Fund.
    2. Mr. Anthony J. Pellechio & Mr. Johan Mathisen, 2006. "Using the Balance Sheet Approach in Surveillance: Framework, Data Sources, and Data Availability," IMF Working Papers 2006/100, International Monetary Fund.
    3. International Monetary Fund, 2006. "Georgia: Selected Issues," IMF Staff Country Reports 2006/170, International Monetary Fund.
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    6. International Monetary Fund, 2005. "Belize: Selected Issues," IMF Staff Country Reports 2005/353, International Monetary Fund.
    7. Morris Goldstein & Philip Turner, 2004. "Controlling Currency Mismatches in Emerging Markets," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 373, January.
    8. Mr. Brad Setser & Nouriel Roubini & Mr. Christian Keller & Mr. Mark Allen & Mr. Christoph B. Rosenberg, 2002. "A Balance Sheet Approach to Financial Crisis," IMF Working Papers 2002/210, International Monetary Fund.
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    Cited by:

    1. Charles Amo Yartey, 2012. "Barbados: Sectoral Balance Sheet Mismatches and Macroeconomic Vulnerabilities," IMF Working Papers 2012/031, International Monetary Fund.
    2. International Monetary Fund, 2009. "Peru: Selected Issues," IMF Staff Country Reports 2009/041, International Monetary Fund.

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