On 28 May, Georgia announced its fourth anti-crisis plan, in which the government will subsidize 4 percent of the interest rate of mortgage loans for five years. The subsidy will be issued for loans not exceeding 200,000 GEL and will only apply to those taking mortgages for the purchase of residential apartments that are newly built or under construction, from 1 June 2020 to 1 January 2021. The state will also ensure the completion of ongoing construction.

High and rising levels of foreign currency indebtedness have been an important topic in Georgia over the past several years. To address this issue and protect borrowers from currency risks, the National Bank of Georgia (NBG), as well as the Georgian Government have implemented regulations to hinder excess indebtedness. Let’s have a look at the timeline (Figure 1) of recent lending regulations and the accompanying monetary policy measures and observe their impact on changing lending patterns in the Georgian economy.

Various business support programs have been implemented in many countries across the world. Grants, interest-rate subsidies, and equity participation are among some of the most adopted tools for promoting firms’ performances (Dupont and Martin, 2006). Such assistance programs also have their own objectives. For example, low-interest rate loans and cash transfers to new and small firms are designed to overcome the financial constraints many firms face (Hubbard, 1998).

Around two years ago, ISET-PI published a blog article on the problem of over-indebtedness in Georgia. The article stressed the idea that due to notably increased access to finances, an aggressive marketing campaign provided by financial institutions, and poor socio-economic conditions throughout the country, Georgians (particularly the poorest) are mired in a swamp of debt, from which they are unable to escape.

According to Geostat’s figures, in the third quarter (Q3) of 2018, Georgia’s real GDP experienced growth of 4% year over year (YoY). Despite the slowdown of the growth rate compared to the previous quarters, IMF recently revised their forecast of economic growth for Georgia upwardly, from 4.5% to 5.0%. Forecasts for other international organizations and the National Bank of Georgia (NBG) remained the same, while ISET-PI, based on October’s data, expect annual growth in 2018 to be 4.6% YoY.