Georgian central bank announces plan to reduce negative effects of coronavirus on Georgian economy
The action plan of the NBG implies utilisation of the capital and liquidity buffers of banking sector during the financial stress. Photo: Nino Alavidze/Agenda.ge.
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In order to reduce the negative effects caused by the coronavirus pandemic and strengthen the Georgian economy, the National Bank of Georgia has developed a temporary supervisory plan, which is in full compliance with the recommendations of the International Monetary Fund, European Central Bank and other leading financial authorities, announces the NBG.
The plan of the NBG implies utilisation of the capital and liquidity buffers of banking sector during the financial stress. This implies lowering the capital and liquidity requirements, which allows banking sector to absorb potential losses and continue ordinary business activities and funding the real economy.
Banks will get relief on the capital requirements by reduction of the capital conservation buffer (2.5% of the risk weighted assets) and the portion of the pillar 2 buffer (2/3 of the currency induced credit risk buffer). This supervisory relief can free 1.6 billion GEL of capital, which can be used for absorbance of potential losses or funding the real economy with 16 billion GEL. The banking sector, above the minimum requirements has capital buffer of 4 billion GEL, which can be fully released in case of necessity", said NBG.
To note, commercial banks shall not use the relief on capital requirements for dividends, share buybacks, equity investments, increasing variable remuneration for management or other types of distributions and payments, which causes reduction of bank capital.
In addition, despite there is no liquidity problems, the NBG has full capacity to provide the economy with required amount of liquid resources.
To achieve this goal the NBG has adequate amount of foreign currency reserves, which will be increased by foreign currency inflows expected from international financial institutions in the nearest future. Whereas the local currency will be provided in the required forms and amounts determined by the economy", said NBG.
NBG also announced that regarding to the grace period on loan repayment proposed by commercial banks, NBG significantly released regulatory requirements in order to give commercial banks maximum flexibility in the process of rescheduling payments for the borrowers.
Despite the state of emergency and a nationwide curfew that aim to contain the spread of COVID-19 in Georgia, there are 18 economic activities that still continue in the country. The government of Georgia is authorised to additionally specify a list of those economic activities that are not restricted and whose operation is necessary during an emergency.
Starting today currency exchange booths and other financial organisations have temporarily stopped functioning today in Georgia with an aim towards reducing the spread of the coronavirus in the country, announces the National Bank of Georgia (NBG).
What support can business expect?
The government of Georgia has presented an anti-crisis plan for Georgian businesses in order to ease the burden caused by the coronavirus crisis. The government responded to the demand of the hotels, restaurants, tourist agencies and tour operators in Georgia and decided to postpone payment of property and income tax by four months.
Georgian Prime Minister Giorgi Gakharia stated that the government will help people who have lost their jobs due to the state of emergency announced to prevent the spread of the coronavirus in the country.
Three more individuals have tested positive for COVID-19 in Georgia, increasing the total number of confirmed cases to 134. As of now, 106 patients are infected, 26 individuals have recovered, while two foreign citizens have left to their country.
The economy of Georgia will recover from the impact of COVID-19 in 2021 with 4.5 per cent growth after experiencing a substantial slowdown in 2020 due to the pandemic and lower oil prices, reads the Asian Development outlook, a financial publication of the Asian Development Bank (ADB).
The Georgian government will identify people who need help as a result of having lost jobs amid the state of emergency in Georgia. The government will determine who has lost the job in this period through the decreased amount of people who pay income taxes, said Vice Prime Minister Maia Tskitishvili earlier today.
Starting June 1 the National Bank of Georgia (NBG) will launch a new tool for liquidity management to support the financing of small and medium-sized businesses in Georgia, announces the NBG.
ADB Country Director for Georgia Shane Rosenthal has praised Georgia's response to the coronavirus pandemic, noting its low infection rate in the Caucasus and Central Asia.
In order to provide more transparency, increase competition and liquidity in the foreign exchange market the National Bank of Georgia is carrying out a reform that will come into force in October 1, 2020.
In order to ensure financial stability the National Bank of Georgia (NBG) is taking actions to promote the development of new technologies and innovative approaches in the financial sector.
A strong customer authentication rule and a new regulation on card-based instruments that will contribute to reducing fraud and secure the rights of customers will come into force this month, announces the National Bank of Georgia (NBG).
The National Bank of Georgia (NBG) sold $40 million during its foreign exchange auction today. The average weighted bid rate was 3.2173. This was the sixth intervention since September 10, 2020. During the past two months the NBG has sold $200 million.