Georgia’s central bank is set to cut interest rates on loans

Georgia’s central bank is set to cut interest rates on loans

access_time2020-05-07 13:45:32

The National Bank is set to take a number of measures to boost low interest rates on loans.

Instruments which are to be used  for this purpose are not specified so far, but according to preliminary data, they will include  currency swap operations with the help of which the regulator will provide financial institutions with national currency guaranteed in dollars.

By using this and some other means, the National Bank will boost a reduction in  interest rates on the lari-denominated loans.

According to the President of the Association of Banks of Georgia Alexander Dzneladze, there is a danger of a scarcity  of laris that creates risks of an increase in interest rates on loans in the national currency. To prevent the further growth of interest that the National Bank is set  to focus on several levers.

“While the exact tools are unknown, several options are being considered. The demand for liquidity from both banks and business companies is quite high and  the planned measures will increase the volume of liquidity in the national currency, ”he says.

Beso Shengelia, the head of the Association of Microfinance Organizations, doesn’t know the details of the measures to be carried out.

In his words, at this stage the interest rate of the refinancing rate has only  decreased but this is not enough to reduce the interest on loans, for this purpose  consultations to launch  other mechanisms are underway.

“We do not have specific information about this. We are  discussing the issue with the National Banks, and several possible tools are being considered. The regulator is aware that the financial sector needs support, but it’s hard to say exactly what will be done. The first step is to reduce the percentage of the refinancing rate from 9% to 8.5%, ”he concludes.


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