Controversial Bill on the National Bank of Georgia Considered with Second Reading

Budget and Finance Committee of the Georgian Parliament considered with a second reading and supported the Draft Organic law on the National Bank of Georgia (NBG) on July 9. 

The bill, which was submitted to the Parliament for consideration on May 21, is initiated by two MPs: Tamaz Mechiauri, from the Georgian Dream-Democratic Georgia party and Nodar Ebanoidze, from the Republican Party.

The proposed bill envisages setting up a Financial Supervisory Agency which would be in charge of monitoring and supervising the banking sector and other financial institutions, the functions which are currently carried out by departments of the central bank of Georgia.

This proposal had become a matter of political accusation and concern for different stakeholders.

“Such a proposal is surprising – what are the economic motives behind it? We think that there are political reasons. Political games are inadmissible in the economy; they will harm the economy,” said Giorgi Abashishvili, President Giorgi Margvelashvili’s economic adviser, on May 22.

In a joint statement on May 25 business associations in Georgia said that the proposed bill poses a threat not only to the banking system, but also to the country’s business and investment climate.

In June, four international financial institutions: the International Monetary Fund (IMF), European Bank for Reconstruction and Development (EBRD), Asian Development Bank (ADB), and the World Bank in a joint letter to PM Irakli Garibashvili and Parliament Speaker Davit Usupashvili called for keeping banking supervision inside the National Bank of Georgia (NBG).

“We considered even more to dissolve doubts, which were generated by our compatriots, trying to discredit the idea as the draft aimed at the destruction of the National Bank. We specified everything, including all possible threats, considered all remarks and recommendations,.” said MP Mechiauri on July 9.

Usupashvili today also assured that the legislative body is not going to finalize its work on the proposed bill until all issues of concern are agreed with the stakeholders.

Political discussion on the National Bank of Georgia intensified after Georgian currency began to devaluate in 2014. By July 2015 the Georgian Lari, which averaged 1.75 from 1995 until 2014, has decreased to 2.24 against the US Dollar.

Nino Japarashvili

Photo caption: Tamaz Mechiauri (left) and Nodar Ebanoidze (right) at the briefing on the NGB bill.