Page 32 - GEORptJun20

5.1.4​ Gross international reserves
Georgia cuts minimum reserves ratio to defend currency
Georgia’s central bank on October 1 cut the required reserve ratio for liabilities denominated in foreign currency, with a maturity of under two years, from 30% to 25%. ​The move followed the hiking, in two 50bp steps, of the refinancing rate to 7.5% during September and the sale by the national lender of another $40mn on the forex market in the month.
The declared purpose of cutting the required reserve ratio was releasing some $700mn to banks and thus preventing a further weakening of the local currency, the Georgian lari (GEL). The downside is that the move again encourages currency substitution, which has been targeted by the central bank over recent years. Also, the forex reserves held by the central bank decrease.
But central bank president Koba Gvenetadze gave an assurance that the monetary authority will only replenish the reserves when circumstances make it possible.
Gross international reserves in Georgia amounted to USD3,399.52mn as of March 2020, ​down from USD3,438.09mn in February and USD3,505.79mn in December last year, according to the National Bank of Georgia. Of which, foreign currency reserves made up the majority at USD3,203.05mn in March.
5.2​ FDI
Georgia - FDI 2012 2013 2014 2015 2016 2017 2018 2019
FDI ($ mn)
1,022.9 1,039.2 1,813.7 1,729.1 1,650.3 1,962.6 1,265.2 1,268
FDI (% of GDP)
5.25 5.93 10.84 11.89 11.27 11.88 7.5 7
Source: Geostat, CEIC
FDI in Georgia steady at 7% of GDP in 2019
The volume of FDI inflows into Georgia amounted to $1.268bn (roughly 7% of GDP) in 2019, edging up 0.2% y/y, preliminary data published by statistics office Geostat shows.
In Adjara, the volume increased 174% y/y to $207mn. Adjara lies on the Black Sea coast close to Turkey and is home to Batumi port. Most FDI went to the
32​ GEORGIA Country Report ​June 2020 ​ ​www.intellinews.com