Page 28 - GEORptMay20

Bosnia & Herzegovina (10.2%) and Albania (9.5%), as well as the South Caucasus — Georgia (14.2%) and Armenia (11.4%).
In absolute terms, Ukraine was the top recipient of remittances in the region, receiving almost $16bn in 2019.
This was a record high for the country, and a result of the rebound in economic activity in Russia. Russia is also a highly important source country for remittances to Central Asia, the South Caucasus and Moldova.
However, in 2020 remittances from Russia have already dropped sharply as a consequence of both the pandemic and the slump in oil prices.
For Central and Southeast European countries, the major source of remittance payments is the western half of the EU, and with some of the world’s largest coronavirus outbreaks in the region’s largest economies, France, Germany, Italy and Spain, as well as in the UK, a similar fall is expected in remittances to the region.
Warning of the human toll from the fall in remittances this year, World Bank Group President David Malpass said in a statement that they are a vital source of income for developing countries that help families afford food, healthcare and basic needs. “The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” Malpass said.
In 2021, remittances to the region are anticipated to recover by 5.0%, which is close to the global average growth of 5.6% forecast by the development bank. However, it warns that medium-term downside risks dominate the remittance outlook for 2021, and the recovery from the crisis is “likely to be prolonged and arduous”.
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,
28​ GEORGIA Country Report ​May 2020 ​​www.intellinews.com