EBRD, Finance Ministry, National Bank of Georgia sign memorandum on lending in local currency

The European Bank for Reconstruction and Development (EBRD), the Ministry of Finance and the National Bank of the Republic of Georgia have signed a Memorandum of Understanding to launch the EBRD’s Local Currency Lending Program in Georgia.

Under the Program the EBRD can provide local currency loans to eligible banks, microfinance institutions and private sector local enterprises at interest rates that aim to catalyse the local currency loan market in Georgia.

The EBRD’s Board of Directors approved the Program in February 2011 to help reduce foreign currency risk and dependence on external financing. The Initiative aims to promote the use of local currency.

"The Georgian authorities would like to confirm their intention to implement reforms and strengthening the country’s capacity to intermediate savings and investments through the use of local currency - the Georgian Lari. Larization is an opportunity for individuals to take loans and open deposits in the desired currency. Dollarisation carries many problems for the country’s economy. The goal of the NBG is to make long term and low interest GEL loans more accessible," said Giorgi Kadagidze, President of National Bank of Georgia.

"We are very pleased that we can support the objectives of the Finance Ministry and the National Bank of Georgia to reduce dollarisation and promote the use of local currency, in line with the EBRD’s Initiative," Olivier Descamps, EBRD Managing Director for Turkey, Eastern Europe, the Caucasus and Central Asia, said. "We will support the authorities not only by providing local currency loans, but we are also ready to offer technical cooperation and policy advice, particularly in the legal and regulatory area and on debt and equity capital market infrastructure."

Since the beginning of its operations in Georgia, the EBRD has invested approximately ˆ1 billion in over 120 projects, with currently 70 percent of the projects representing investments into the private sector.


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