Today the Parliament of Georgia by 82 votes unanimously adopted and supported draft resolution of the Parliament of Georgia on the Report of the National Bank’s Activities for the Year 2010, submitted to the legislative body by Giorgi Kadagidze, the Governor of the National Bank.

Annual report of the National Bank details the NBG’s activities during 2010. In addition, the report presents assessments of the National Bank of processes going on in the country and abroad, that had significant impact on Georgian economy as well as on fulfillment of objectives set by the NBG during 2010.

According to the Governor of the National Bank, one of the major challenges during the past year was inflation, which, in the course of the second half increased up to 11.2%. 9/10 of this percentage was due to rise in food prices.

As Giorgi Kadagidze noted, the National Bank was realizing that inflation was determined by the external factors and he used to emphasize then that the inflation figure would go back to normal. “All criticism towards the National Bank as if inflation was caused by excessive money supply got nullified,”- he said.

Governor of the National Bank named revenues from export and service sector as one of the most important achievements in the country’s economy. As Mr. Kadagidze mentioned, the year 2010 was quite positive since the economic figure of the country returned to its pre-crisis value and got even improved. If during 2005 – 2007 main driving forces of the economic growth were direct foreign investments, in 2010 such driving force was represented by revenues generated from export and service sector. In recent years the country also received significant income from tourism.

According to the evaluation of the NBG President, Georgia currently has in its history the highest reserve of foreign currency ever. As Giorgi Kadagidze mentioned at the plenary session of the Parliament, Georgia’s current highest foreign exchange reserve, in the amount of 2.800 mln. USD, was a guarantee of the country’s macroeconomic and financial stability. “There are no questions in this regard and we are in a very good position especially in the light of processes going on in Europe and developed world today”, - said the Governor.

Mr. Kadagidze also addressed the issue of consumer deposits at today’s session and noted that interest rates compared to Western Europe were still high and therefore increasing maturity of loans and reduction in interest rates were one of the major priorities of the NBG. This would ease burden of the population. In order to prove the progress in the banking industry, the NBG Governor mentioned that it would have been impossible 5 – 6 years ago to disburse loans at 11 – 12%. “At that time 12 – 13% interest rates were set on deposits, today such rates are already on loans. Dynamics is definitely positive”,- said Giorgi Kadagidze. 

As regards protection of consumers’ rights, the NBG Governor mentioned that certain steps were taken towards this end and consumers got offered a Dispute Service, which had been well performing. According to Giorgi Kadagidze, many consumers applied to this body, systemic problems were being researched and addressed there. “We are at the stage of development where we have to find a golden mean between protection of the consumer rights and rights of financial institutions. If we fail to find such mean and maintain proportion, we shall not attain desirable results,- said Giorgi Kadagidze.

At today’s Parliamentary session the Governor of the NBG also noted that from 2012 the insurance companies would be obliged to publish monthly financial statements. This was the National Bank’s initiative aimed at fostering public control over respective companies. Unlike previous years, currently the insurance sector is developing seriously and it became an attractive industry for investors. In addition to foreign investors already present on the insurance market, large European insurance companies are also showing interest to invest.