The National Bank of Georgia (NBG) has received international recognition for its robust banking sector and effective monetary policies, as highlighted in an article published last week by Capital Finance International (CFI.co), a leading British publication on business, economics, and finance.
The article, titled Unveiling Georgia’s Economic Potential: Strength, Challenges, and Opportunities, lauds Georgia’s banking sector for its resilience, strong capitalization, and adequate liquidity, even amid a challenging global economic climate. It also acknowledges the NBG’s role in driving financial stability and fostering sustainable growth in the country.
Key Achievements in Financial Stability and Sustainability
CFI.co emphasises the NBG’s success in implementing “effective” monetary policies, which have not only stabilised the domestic financial sector but also supported its growth. The article underscores the central bank’s initiatives to develop a green bond market, an effort reflecting its commitment to sustainable economic growth.
In 2022, Georgia issued its first corporate green bond, aimed at supporting renewable energy projects. The article describes this as a milestone in the country’s financial innovation, paving the way for environmentally conscious investments.
Reduction in Foreign Currency Dependence
Another notable achievement highlighted in the publication is the NBG’s progress in reducing the economy’s reliance on foreign currency. Through macroprudential measures introduced since 2017, the share of foreign currency loans has decreased from 80% in the early 2010s to approximately 43% today. Similarly, foreign currency deposits have dropped from 80% to 52%. These measures have enhanced the banking sector’s resilience to external shocks and currency fluctuations.
CFI.co commends the NBG for its proactive approach to inflation management. Despite global inflationary pressures, Georgia’s inflation rate decreased significantly from an average of 11.9% in 2022 to 2.5% in 2023, with projections of a further reduction to 1.1% in 2024. Since March 2023, inflation has consistently remained below the Bank’s target of 3%.
Compliance with International Standards
The article also acknowledges Georgia’s adherence to international financial sanctions, particularly those imposed on Russia and Belarus. According to feedback from international partners, Georgian financial institutions fully comply with these requirements.
Additionally, the NBG’s comprehensive regulatory and supervisory framework to combat money laundering and terrorist financing within the virtual assets sector has drawn praise. The Council of Europe’s MONEYVAL positively assessed Georgia’s measures, upgrading the country’s compliance with the Financial Action Task Force’s 15th Recommendation from “partially compliant” to “significantly compliant.” This achievement places Georgia among only seven MONEYVAL member states to receive such recognition.
The article concludes by highlighting the broader implications of the NBG’s efforts, positioning Georgia as a model for resilience and financial innovation in the region. By maintaining sound monetary policies, fostering sustainable growth, and aligning with international standards, the National Bank of Georgia continues to strengthen the country’s economic foundation.
Founded 12 years ago, Capital Finance International is a quarterly magazine and online resource renowned for its analysis of global business and financial developments. Its recognition of Georgia underscores the country’s growing reputation in the international financial community.
