The National Bank of Georgia (NBG) recently acquired 7 tons of high-quality monetary gold valued at $500 million, constituting approximately 11% of its total reserves. This marked the first occasion that Georgia acquired gold for its reserves since it regained independence.

According to the preliminary statistics released by GeoStat, Georgia’s real GDP contracted by 3.8% year over year (y/y) in Q3 2020. As a result, the estimated real GDP declined by 5.0% in the first nine months of 2020, which is in line with the International Monetary Fund’s (IMF) and National Bank of Georgia’s (NBG) latest projections of -5% y/y (from October and November correspondingly).

As the Georgian Lari (GEL) briefly depreciated in September 2020, the National Bank of Georgia (NBG) once again became the subject of criticism for not being able to stabilize the exchange rate even though it had injected 120 million US$ into the economy. At a press conference (2020/09/16), the President of the NBG objected that the aim of the injection of US$ was not to strengthen the GEL since the NBG operated under a floating exchange rate policy. Rather, he went on to explain, the NBG’s constitutional duty was to ensure price stability on the basis of an inflation-targeting framework.

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.

According to the preliminary statistics released by GeoStat, Georgia’s real GDP growth constituted 5.7% year over year (y/y) in Q3 2019. As a result, estimated real GDP growth for the first nine months of 2019 amounted to 5.0%, which is above the National Bank of Georgia’s (NBG) growth forecast for 2019 (the forecast remained unchanged at 4.5%). Meanwhile, based on September’s data, ISET-PI expects annual growth in 2019 to be 4.9%.