Georgian Capital Market Grew in 2017

access_time2018-01-12 12:54:58

The year 2017 was very important for the Georgian capital market and was characterized by a large  amount  of corporate bonds issue worth  220 million. If securities by international organizations are added to this figure, the amount will increase to 330 million.

The revitalization of the capital market in 2017 was mainly due  to economic growth and government assistance.

The capital market is directly dependent on the  development of the economy, and one of the incentives for the growth of the bond issue was that Georgia managed more or less to overcome external shocks and demonstrate stable growth.

 In particular, in 2015-2016 the economy of the CIS countries decreased 0, 9% while in Georgia it  grew by 3%. It is also expected that in 2017 the growth will be 5% with an inflation rate of 6%.

In the medium term, Georgia’s economy is expected to grow 6-7%, inflation rate will be  3-4%, unemployment - 10-11%.


As for the bond market, it was promoted by the growth in demand for loans. In the first half of 2017, the corporate loan portfolio amounted to GEL 17.7 billion, which is 13, 4% more than in 2016. The main source of the loans were banks, international investment funds and corporate bonds.

 

The government also encourages the capital market growth - in 2018 it is planned to consider amendments to the tax legislation, which provide for the exemption of interest on bonds from taxation – all this will increase the interest of business in issuing securities. It is the capital market that can become an alternative means of placing savings of the population along with bank deposits.

 

It is also planned to enact  the  accumulative pension system  in 2018,  which is a direct incentive for the development of the corporate bond market - it it’s expected that 80% of the funds received by the pension fund will be invested in the local securities market.





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