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

Andreas Billmeier () and Johan Mathisen

No 2006/173, IMF Working Papers from International Monetary Fund

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.

Keywords: WP; foreign exchange; foreign currency; commercial bank; banking system; balance sheet; central bank; Balance-sheet analysis; BSA; Georgia; vulnerabilities; currency mismatch; liquidity position; maturity mismatch; cash flow; one-off foreign-currency receipts; foreign exchange exposure; Commercial banks; Currencies; Currency mismatches; International reserves; Asia and Pacific (search for similar items in EconPapers)
Pages: 29
Date: 2006-07-01
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Citations: View citations in EconPapers (2)

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