According to International Financial Reporting Standards (IFRS 9), credit risk assessments should incorporate forward-looking analysis. According to the previous standard, credit loss was calculated on the basis of incurred losses. While according to IFRS 9, credit losses are required to be calculated on the basis of expected credit losses.


    The National Bank of Georgia (NBG) welcomes this amendment and believes that it will facilitate timely recognition of credit risks and will therefore have a positive impact on financial stability. Under IFRS 9, loan-loss provisions may dampen pro-cyclical behavior of financial institutions.


    To ensure efficient implementation of IFRS 9 and the comparability among financial institutions, the NBG developed IFRS 9 guidelines and starting from 2018 regularly publishes macroeconomic and financial forecasts and risk scenarios.