NBG Presents 2016 Annual Report to Parliament
The NBG (National Bank of Georgia) presented its 2016 annual report to the Parliament of Georgia.
The report is published in accordance with Articles 68 and 69 of the Fundamental Law of Georgia in relation to the National Bank of Georgia and concentrates on the "Report on Conducting Monetary and Foreign Exchange Policies", the "Report on the Condition of the Economy", the "Report on the Operational State of the Affairs for the Reporting Year" and "Financial Reporting," as approved by the auditors.
Discussed are the frequent trends the NBG experienced during the reporting period, and the processes both within the country and abroad, affecting and influencing the economic situation in Georgia and the fulfilment of the goals set by the NBG, are assessed.
Georgia saw a 2.7 percent economic growth in 2016 according to the report, with the service sector having a major input (1.5 percent) in recent economic growth, although industrial sectors are also considered major contributors to the country’s economy, the construction sector being a key one, showing 8.1 percent growth in 2016, with both government financed infrastructural projects and private sector initiatives equally contributing to the increased economic figures. The trade sector is claimed to have increased by 1.8 percent compared to the previous year.
The report states that investments were the driving force for economic growth in 2016, with infrastructure projects implemented by the Georgian government said to be playing the main role, while the private sector is reported to be the most active in the construction sector. As the report states, investments made by British Petroleum (BP) for the new pipeline construction were crucial in this regard. The export shares in 2016 are reported as having made a loss of - 0.1 percent. However, the growing number of visitors throughout the year was stable, as were tourism revenues, having a positive impact on service export growth.
In 2016, the report says NBG’s international reserves increased by $236 million, amounting to $2.8 billion by December 31. As the NBG report states, a high level of dollarization remained the major challenge for the Georgian economy in 2016. A low level of dollarization is regarded as important to maintain macroeconomic stability and fiscal sustainability. In 2016, the level of dollarization of loans was 65.2 percent, while dollarization deposits were down – 71.4 percent.
Together with the Georgian government, the NBG implemented a 10 point ‘Larization’ plan to encourage the use of Georgian Lari on the market.
“We need an institutionally independent, strong and effective National Bank and this should be guaranteed by the Parliament of Georgia,” said Chairman of the Budget and Finance Committee of the Georgian parliament, Irakli Kovzanadze. “The 2016 report of the National Bank was presented in a very interesting way and there are lots of issues which have been analyzed deeply and thoroughly. These reports were not discussed in previous years in The Parliament of Georgia- this is somewhat a renewal of tradition, and the report of the National Bank should be heard and evaluated by Parliament,” he added. “Last year showed us that we have issues in two directions: monetary stability and steadiness of the financial-banking system. If the banking system situation is stable in relation to inflation, then we may face some challenges. Accordingly, it is important to know that attempts to hold back inflation should not be an obstacle for economic growth”.
“It is natural that Members of the Parliament had some questions; crucial ones, too. I think that it was a very interesting discussion. The Budget and Finance Committee will have some recommendations, and we support the presented report for approval,” Kovzanadze concluded.
Nino Gugunishvili