Page 44 - GEORptApr21

Georgia earmarks $110mn for guaranteeing loans to productive sectors
(6.9% for the Bank of Georgia and 8.7% for TBC) even after the provisioning.
Furthermore, the central bank NBG has allowed banks to use part of their supplementary, conservative buffers under a decision issued on April 3. The supplementary resources released under this decision are more than enough to cover provisions taken for covering future losses, according to data included in the two banks’ press releases, but at the same time the release of the supplementary buffers is a temporary, one-year, measure.
“Our understanding is that the specific quantum of the provision reflects the NBG's current expectation of estimated credit losses on the Bank's lending book for the whole economic cycle, given current economic expectations,” Bank of Georgia said in a press release sent to LSE, referring to the provision taken.
Bank of Georgia Group announced that, further to the announcement on 3 April, relating to the NBG’s updated supervisory plan for the Georgian banking sector, it has agreed with the NBG that JSC Bank of Georgia will create a general provision of Georgian lari (GEL) 400mn on the bank's local accounting basis.
This represents approximately 3.3% of the Bank's lending book, and the general provision is expected to be taken in the first quarter of 2020.
TBC Bank decided to book additional provisions in accordance with local standards, at the end of March, at 3.0-3.3% of the loan book, according to a press release issued April 3.
The global and thus Georgian economic environment is difficult and uncertain, TBC said in its press release. Bank economists' latest analyses forecast that the Georgian economy will contract in 2020, which will have a negative impact on many businesses and individuals in the country.
Therefore, in close co-ordination with the NBG, TBC has decided to create an "extra loan loss provision buffer" to prepare for the potential impact of the COVID-19 pandemic on the Georgian economy.
The government of Georgia has passed changes in a credit guarantee scheme to provide more state guarantees on loans in the most productive sectors. The budget of the programme will be Georgian lari (GEL) 300mn ($100mn) instead of the initially announced GEL20mn.
The credit guarantees are valid for no more than 10 years after the loan is issued or restructured.
Furthermore, along with the banks, microfinance organisations will be involved in the programme, for which an additional GEL30mn ($10mn) will be allocated, economy minister Natia Turnava said.
The programme will be administered by the Ministry of Economy under the name "Produce in Georgia".
The government decree also stipulates that in order for a company to be eligible to participate in the credit guarantee system, its revenue should not exceed a certain threshold and its existing loan liabilities should not exceed GEL12mn. Within the framework of the programme, the beneficiary is entitled to use several loans.
44 GEORGIA Country Report April 2021 www.intellinews.com