GEORGIAN
 

Larization Measures

 

Increased Access to the Long Term lari loans

1. The commercial banks need enough liquid assets to transform short term deposits to long term loans. NBG will increase flexibility of the transmission mechanism and widen the list of eligible collateral.

2. According to IMF recommendation, NBG has introduced the Liquidity Coverage Ratio under Basel III with the national currency treated preferentially.

3. To develop capital markets, the companies shall be able to issue long term bonds and raise capital. tohether with the NBG, the goverment has elaborated a common strategy and that is being jointly implemented.

4. A developed local government securities market is a necessary precondition for the development of the capital market. The goverment, along with the support of NBG will continue to move to this direction. Namely, we will: a) issue so called “benchmark” bonds, main characteristic of which is predictability and a high liquidity. The market participants will know the calendar of its emission for the next 5 years; b) introduce the ‘primary dealers’ institute. The banks participating in the primary auctions of the government securities will be required to ensure liquidity of the secondary market for every participant of the market.

5. The Implementation of Pension Reform will improve the social security provision and contribute to the economic growth by increasing the demand for long term instruments. This ultimately  ensures the growth of the long term lari resource.
 
Adequate Sharing of FX Risks

6. In order to hedge the borrowers against FX risks,  according to amendments in legislation small size loans (loans below 100 thousand lari from Jan 15,  2017) are to be issued only in local currency.

7. The GOG together with NBG developed a scheme to facilitate the conversion (to the local currency) of the loans issued before January 1, 2015 in US dollars. This was a one-off social measure for the borrowers who were mostly hit by the depreciation of the exchange rate.

8. 
In line with IMF recommendation, in the cases of lending to the unhedged borrower, NBG will use the macro-prudential instruments to ensure the availability of adequate buffers.
 
Pricing in lari

9. Amendments are being prepared in The Organic Law on the National Bank of Georgia, according to which pricing of every goods and services for legal entities is mandatory only in lari. This amendment entered into force from July 1, 2017. 

10. The GOG along with NBG, implemented safe service for real estate transactions (so called “escrow” account service), which aims at avoiding risks and reducing cost of real estate transactions both for the sellers and buyers. The service implemented in cooperation with public registry and is optional for the consumers. This service is an additional stimulus for the settlement of real estate operations in lari.

 

 
 
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