“The National Bank of Georgia (NBG) has taken decisive actions to mitigate the impact of the pandemic on the real economy and the financial sector. The central bank provided lari and dollar liquidity and coordinated with the Ministry of Finance the provision of long-term lari liquidity. We welcome the authorities’ continued commitment to the inflation-targeting framework and the floating exchange rate. The NBG reduced its policy rate by a cumulative 100 basis points since April 2020 and appropriately maintains rates steady since August to firmly anchor inflationary expectations around its inflation target. Staff supports the current monetary stance, which should be maintained until there are clear signs that inflation remains on a downward trend in the context of recent lari depreciation. Keeping inflationary expectations anchored may call for tightening the monetary policy stance should pressures on lari exchange rate feed into expectations.
“Banks have been generally resilient amid the pandemic, helped by their sound initial capital and liquidity positions and the strong response by the NBG in dealing with the shock. Staff welcomes the NBG’s proactive monitoring of the impact of the crisis on asset quality in coordination with the banks, while also making further progress in implementing the resolution framework"— the statement issued by Mercedes Vera-Martin after a virtual review mission of the IMF says.