IMF says stands ready with funds to support Georgia

WASHINGTON Aug 11 (Reuters) - The International Monetary Fund and other global financial institutions on Monday expressed concern over the conflict between Russia and Georgia, and the IMF said it stood ready with advice and resources to support Georgia's economy.

The U.S. Treasury immediately welcomed separate statements by the IMF, the World Bank and the European Bank for Reconstruction and Development, and said Georgia's economy was set to weather the crisis given its progress in recent years to a market-led economy.

The conflict erupted last week when Georgia sent forces to retake the breakaway territory of South Ossetia, prompting a military response by Moscow that drove Georgian troops out of the region on Sunday.

Tensions over South Ossetia have always been a worry for investors in Georgia, and could affect other countries, particularly Armenia and Azerbaijan.

IMF First Deputy Managing Director John Lipsky said the economic damage to Georgia was "regrettable" given its progress to bolster growth through reforms, which have attracted foreign investment.

"We are ready to support Georgia with policy advice, technical assistance and, if needed, financial support using available IMF facilities," Lipsky said.

The IMF does not have a program in Georgia and on July 7 said it was downsizing its office in the capital, Tbilisi, as part of an overhaul at the Washington-based institution.

The EBRD urged a quick resolution to the crisis and said it considers the Georgian banking sector efficient and well capitalized.

The World Bank said it was considering further lending to Georgia of between $300 million to $350 million over the next 12 months to support the government's reform agenda.

The World Bank's private-sector lender, the International Finance Corp, was a key financial backer of the $3.7 billion Baku-Tblisi-Ceyhan oil pipeline developed by a consortium led by BP (BP.L). The pipeline starts in Azerbaijan and runs through Georgia to the Mediterranean coast of Turkey, where oil is loaded for shipping to international markets.

IFC's $250 million investment in the project was aimed at allaying political risk concerns among the developers and investors in the pipeline. An IFC official said it was monitoring the situation. (Reporting by Lesley Wroughton. Editing by Dan Grebler)