Koba Gvenetadze, Governor of the National Bank of Georgia, took part in the International Monetary Fund event summarizing the Regional Economic Outlook for the Middle East and Central Asia, chaired by Selim Cakir, resident representative of the IMF in Georgia. The Outlook examines the impact of the key challenges in the region on the economy today. In addition, the Outlook includes recent IMF forecasts and key priorities that will help countries in the region deal with short-term challenges and lay a solid foundation for transformative recovery.

 

Koba Gvenetadze discussed the challenges in the region and economic difficulties, which the economic team of Georgia is successfully dealing with. The NBG Governor noted that high dollarization is a common concern of many developing countries, as well as other countries in the region, and summarized the actions taken by the National Bank of Georgia in this regard. The fiscal consolidation implemented by the Georgian government in parallel with the tightened monetary policy is important for reducing the rate of inflation and bringing it closer to the target level.

 

 

"To address the dollarization issue, the National Bank of Georgia has long been resolute by undertaking critical - albeit quite unpopular - measures. This year in particular, to discourage intensifying intermediation in foreign currency, we, for example, decided to maintain the remuneration of reserve requirements on funds borrowed in the US dollar and in Euro at 0 percent even as the Fed Funds Rate and ECB monetary policy rates began rising. This is, in effect, a macroprudential instrument, discouraging banks to intermediate in FX – with the discouragement being higher the higher Fed/ECB rates get. Recent numbers indicate that this did indeed help in moderating credit activity", Governor Gvenetadze noted.

 

Koba Gvenetadze pinpointed the importance of the IMF-supported programs. “I would like to express my gratitude towards the International Monetary Fund for actively supporting the NBG and Georgia. Fund support is crucial in situations like this. We strongly believe that the IMF programs have not only contributed financially to our region (for example during the pandemic), but more importantly they also blew confidence in our macro policies. We are very glad that we have an ongoing Fund supported program in the country – this program contributes to the overall credibility of the Georgian financial system, encourages investment and supports the economic growth of the country”, Koba Gvenetadze said.