People saving less, borrowing less because of coronavirus in Georgia

Following the spread of coronavirus, credit activity has slowed significantly in Georgia and this year credit portfolio growth will shrink between 0 and 5%, announces the National Bank of Georgia.

In April 2020, the annual growth of loans, excluding the effect of the exchange rate, amounted to 17 per cent. At the same time, the ratio of loans to gross domestic product still exceeds the long-term trend, which reflects the effect of high credit growth and exchange rates in previous periods.

The increased gap indicates an increase in the debt burden and vulnerability, especially in the corporate sector. Given this, there will be no need to increase the countercyclical buffers this year", says the NBG, which left the countercyclical buffer unchanged, at 0 per cent at today's financial stability committee meeting. 

Last month commercial banks in Georgia lent 34.21 billion GEL (about $10.69b/€9.71b) and received deposits of 27.58 billion GEL (about $8.62b/€7.82b), says the NBG.

The amount of deposits decreased by 4.49 per cent month-on-month, while loans also decreased by 2.25 per cent. 

Loans taken out in Georgian lari decreased by 87.35 million GEL (about $27.30m/€24.78m), while loans denominated in foreign currencies decreased by 699.71 million GEL (about $218.66m/€198.52m) month-on-month.

Last month, the sum of term deposits (deposits made for a predetermined period of time) decreased by  523.02 million GEL (about $163.44m/€148.39m), while demand deposits, which allow for flexible withdrawal, also decreased by 774.69 million GEL (about $242.09/€219.79m).

There are 15 commercial banks in Georgia, including 14 foreign-owned banks and one branch of non-resident banks.