Page 34 - GEOGRptJun19

8.1.4 Banks specific issues, regulation
Georgia’s FinMin advocates for softer lending regulations
Georgia’s Finance Minister Ivane Machavariani said that the National Bank of Georgia (NBG) should revise the recently imposed banking regulations which tightened the process of issuing loans, Georgia Today reported .
The call seems to be prompted by concerns related to country’s economic growth. The World Bank on April 5 revised downward its forecast for Georgia’s GDP growth this year to 4.6%, down from 5% projected in January this year. Bankers’ association warned of the tighter regulations’ impact on growth.
“I hope that the National Bank will revise these regulations if necessary. It’s a bit early to assess the effects of these regulations , but its effect on the construction sector, for example, is easy to see,” he said, adding the regulations should be softened as much as possible.
Last week, Georgia’s Minister of Economy and Sustainable Development Giorgi Kobulia expressed a different view: he said that the government is not going to soften the banking regulations, according to which banks are not allowed to give their clients loans without studying their solvency.
"These regulations are adequate and serve to protect the people from taking loans without realizing the possible consequences,” he stated.
The new banking regulations took effect in Georgia on January 1, 2019 meaning that people will not get loans from banks if there are no solid guarantees that they will be able to pay it back on time.
8.1.5 SMEs finance
Georgia launches loan guarantee programme to help SMEs
Georgia’s government says it will facilitate better access to finance for small and medium sized enterprises (SMEs) with a new credit guarantee programme that came into force on April 1.
“This year, GEL20mn (€7.4mn) has been allocated from the state budget and we hope the banks will issue loans worth about GEL250mn (€92.6mn) for small and medium sized businesses”, said Economy Minister Giorgi Kobulia.
The goal of the programme is to support SMEs which either operate in sectors where loan issuance is restricted or do not have enough property to secure a loan. Entrepreneurs with an average turnover over the past three years of below GEL20mn and loan liabilities of not more than GEL8mn are eligible for the programme.
The credit guarantees will be issued only on loans taken out in Georgian lari. The maximum period of a guarantee will be 10 years.
The minimum loan amount is GEL50,000 and the maximum is GEL2mn.
8.1.6 Bank news
Bank of Georgia’s earnings rise 10% y/y boosted by
One of Georgia’s two largest lenders, London-listed Bank of Georgia, on May 14 announced that its first-quarter adjusted earnings rose by 10.4% y/y as lending advanced supported by a robust economy. However, the
34 GEORGIA Country Report June 2019 www.intellinews.com