WASHINGTON, August 11, 2008 (AFP) - The International Monetary Fund said Monday it was 'greatly concerned' about an armed conflict in Georgia as Russian and Georgian troops continued fighting amid mounting civilian casualties.

Russian troops earlier Monday moved deeper into Georgian territory and the Tbilisi government said its soldiers had been forced to retrench closer to the capital.

'The management and staff of the International Monetary Fund are greatly concerned about the recent events in Georgia. The loss of life is tragic,' the IMF said.

'Moreover, the economic damage is regrettable for a country that has worked hard in recent years to improve the economic well-being of its population,' the 185-nation institution said.