Volume of Lending by Commercial Banks in Georgia Increases

The volume of lending by commercial banks, including loans to non-residents, in December 2018 increased by GEL 480.3 million ($180.75 m) or by 1.8 % compared to the previous month and constituted GEL 26.6 billion ($9.99b) by January 1, 2019.

The information was released by the National Bank of Georgia (NBG).

The NBG says that the volume of loans in the national currency increased by GEL 159.3 million ($59.95 m) and the volume of loans in foreign currency increased by GEL 321 million ($120.8m) or by 2.2% in the same period. The NBG added that as a result of operations, or exchange rate effect excluded, the abovementioned indicator increased by 2.6%.

In addition, the NBG reports that by the end of December 2018, the total volume of national currency denominated loans issued by commercial banks amounted to GEL 3.4 billion ($1.28b) that is 0.9% more compared to the previous month.

Meanwhile, foreign currency denominated loans to resident legal entities constituted GEL 8.1 billion ($3.05b), 2.4% more than in the previous month. The exchange rate effect excluding volume of lending in the foreign currency increased by 2.9%.

In December 2018, the volume of lending to resident individuals increased by 1.6% or GEL ($84.11m) million, and constituted GEL 14.2 billion ($5.34b) by January 1, 2019.

NBG reports that the Larization ratio for total loans constituted 42.96% by January 1, 2019 and decreased by 0.18% compared to December 1, 2018.

To note, “Larization” is the de-dollarization of the Georgian currency. The term may have two meanings:

1. The percentage share of Lari in all currency usage. The Larization of the economy is the percentage share of Lari in the total money supply of the economy.

2. The process when the percentage of Larization is increasing.

Larization was launched by the Georgian government to ensure a stable economic environment, as in this case the country’s currency is less at risk of decreasing in value and, accordingly, external shocks will have less influence on the national economy.

Under the condition of increased Larization, the monetary policy of the National Bank becomes more effective, a necessary precondition for economic stability. Therefore, one of the primary tasks for the National Bank is to increase Larization.

By Thea Morrison

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