ADB approves $25mln loan for vocational education in Georgia

“As you know, the first session of the newly elected Parliament must be held no later than the tenth day after the official announcement of the results. Also, you know and it is publicly visible that Salome Zourabichvili is again violating the Constitution of Georgia and not convening the first session.The first session of the Parliament of Georgia will be held on November 25 at 12:00. The CEC has already made a statement that the CEC has already prepared the temporary mandates of the elected members, therefore all elected members must receive this temporary mandate from the CEC. Written registration will begin on November 25, at 11:00. The registration of newly elected members will be carried out through a list near the parliament's session hall, and at 12:00 the session of the newly elected parliament will begin, which will be chaired by its oldest member, Lado Kakhadze.The first item on the agenda is the certification of credentials. The CEC Chairperson is also involved in this process. After his report, the parliament will certify the credentials of all 150 members of parliament and put this issue to a vote, after which factions will be formed, this will happen during the break. After the break, the nomination of the Chairman of the Parliament and his deputies is already taking place and then the election. Then another break is announced, during which the committees are formed and then the committee chairmen are elected at the next session. Accordingly, at the first session we will have three main issues: the certification of the powers of the Parliament and its members, the election of the Chairman and his deputies, and election of the committee chairmen.During the week, the agenda will also include setting the date for the election of the President and the declaration of confidence in the new government, along with the government program. Accordingly, next week, along with the certification of the powers of the Parliament, we will declare confidence in the government and by the end of next week we will already have both a fully functioning 11th convocation Parliament and a newly approved government.As for the procedure for electing the president, the date is set, and after the date is set, the CEC joins the process that conducts these elections. After the date is set, the CEC forms an election board consisting of 300 members. These 300 members include all 150 members of parliament, while the other half is formed from twenty members of the Supreme Council of the Autonomous Republic of Abkhazia, 21 members of the Supreme Council of Adjara, and the remaining 109 members are already formed from representatives of self-government, in accordance with the proportion adopted by the parties in 2021. This proportion will also be established by the CEC,” Papuashvili said.The CEC summarized the October 26 elections on November 16. The Georgian Dream received almost 54% of the votes, which means 89 deputies in parliament.President Salome Zurabishvili, who like the opposition parties does not recognize the election results, has appealed to the Constitutional Court to declare the elections unconstitutional.The international community is calling on Tbilisi to conduct an objective investigation into the disputed election results to verify “serious suspicions” of fraud.

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According to the NBG's interactive statistics, irreversible growth has been observed since July. At that time, the annual rate was +10.7%Y.Y. In October (Q3/2024), it increased to 12.6%.Despite the acceleration, the annual growth rate lags behind the consumer lending rate several times (The annual growth rate of consumer loans is 26.3%. The regulator considers the pace to be sustainable).According to the NBG's analytical report, as of Q3/2024, the share of mortgages is 19.6%. At the beginning of the year, it exceeded 20%, and in 2023 it will reach 21%.The mortgage loan portfolio as of Q3/2024 is GEL 11.6 billion, of which the balance of loans with a maturity of 5 to 10 years is GEL 3.046 billion. Mortgages with a maturity of more than 10 years amount to GEL 7.7 billion (Q3/2024 – GEL 2.4 billion; GEL 7.03 billion). Of this, the equivalent of GEL 3.2 billion are foreign currency loans.As you know, since the fall of 2022, the maximum term of foreign currency mortgages has been reduced from 15 to 10 years.With the summer regulation of the same year, a +3% corridor was opened for both foreign currency and lari mortgages, although foreign currency mortgages were more pressured. The 3% corridor assumes that when issuing a variable-rate loan (most foreign currency mortgages are a mix of variable and fixed), the borrower's solvency is assessed at +3%. This means that if the rate increases by 1, 2 or 3%, the mortgagee should not have difficulty servicing the loan. And the bank must be sure of this when issuing a loan that it will never have difficulty for a period of up to 10 years.

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In addition, sums on the current deposits of the banks have decreased to 26 million GEL (Q3/2024 – 29.1 million).The bank, which is in the last position in terms of assets among commercial banks (ahead of digital banks), has significant growth. Assets increased by 8 million in October.As of 01.10.2024, the dollarization of the loan portfolio increased to 44.4%, and deposits to 23.5%.

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The sides highlighted the Middle Corridor, a logistics route connecting Central Asia and China to Europe via the South Caucasus through Georgia, and its growing dynamic of freight traffic”, and agreed to direct joint effort towards attracting additional cargo to the route by further developing existing transport and logistics infrastructure.The Ministers underscored the importance of the Green Energy Corridor project for energy independence of both Georgia and Europe and the Black Sea submarine cable project, an international initiative to connect the South Caucasus power grid to that of Europe. They emphasised the role of the Corridor in “further deepening the regional cooperation and delivering the green energy resources of the South Caucasus to the European Union market”.The meeting additionally focused on Georgia’s Anaklia deep sea port project, the  Baku-Tbilisi-Kars railway line and the possibility of scheduling more flights between the two countries.Davitashvili and Jabbarov pointed out the bilateral trade turnover between the two countries had exceeded $1 billion between January and October, making Azerbaijan Georgia’s sixth largest trade partner and third largest export partner.The officials also touched on the “growing volume” of Azerbaijani investments in Georgia’s economy,  noting  2023 figures represented a year-on-year increase of 3,018 percent. The Ministry added Azerbaijani investors were showing interest in transport, logistics, construction, financial services, industry, real estate, communications and other sectors in Georgia.

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The NBG noted that this achievement represents the fourth time the NBG has been awarded this prestigious certification.“For over a decade, the NBG has dedicated significant efforts to aligning with and enhancing international information security management standards. The institution places paramount importance on safeguarding the availability, confidentiality, and integrity of information,” reads the statement.“Ensuring information security on a global scale is a significant challenge today. As the manager of critical business systems, the National Bank of Georgia must implement secure business operations, which directly enhances the reliability of banking services,” stated Natia Turnava, Acting Governor of the National Bank of Georgia. “This year, the NBG successfully met the updated requirements of ISO/IEC 27001:2022. Compliance with this standard is crucial not only for the NBG as a central institution but also for the overall development of the financial sector.”The audit process involved both Georgian and international companies. The certification was issued by TÜV SÜD Management Service GmbH, a renowned German certification body.

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The Banking Association will study the arguments of the National Bank of Georgia on increasing the 3-point scale to 5 - how proportional are the new rates of 0.5% and 1% to assets, capital, threats, challenges, expectations...The National Bank of Georgia submitted a draft amendment to the penalty rules, which will add 0.5% and 1% to the 0.01%; 0.05%; 0.1% penalty rates, for discussion last week and will finalize it next week.The regulator cites a 15-year trend of 10.8-fold growth in banking sector assets (04/2009 – 8.3 billion; 09/2024 – 90 billion).However, it is noteworthy that the threshold increased in the meantime, in 2018, when the Responsible Lending Framework and a number of regulations came into effect, including the GEL 200,000 threshold for foreign currency lending, which has already been raised to GEL 400,000.According to financiers, a 10-fold increase in the sanction rate between 2018-2024 interval should not only follow the trend of asset growth. There are many other circumstances to consider, including the banks' own funds in financial indicators and the increased cost of resources.In addition, since the last change, when the maximum limit was raised to 0.1%, only 6 years have passed, not 15. Assets have also increased 2.6 times compared to 2028 (04/2018 – GEL 34.3 billion), not 10 times. As of 09/2024, the chartered capital of the banking sector is 13.3 billion GEL.According to the current rules, which were updated in April 2018, for failure to comply with the requirements (restriction, limit, prohibition...), the bank is fined 0.01%, 0.05%, 0.1% of the regulatory capital (how much it has at the time of violation), not less than GEL 20,000, and the maximum is exceeded.In addition, the revised rule also sets fixed fines, which have increased compared to the previous one, 2009. These include 5,000 GEL for violation of reporting rules, 10,000 GEL (for each case) for failure to submit documents related to bank administrators. 20,000 GEL for repeated violations and 50,000 GEL for multiple violations.(See: 10, 8​1, 8​2) Source: BRGAccording to the draft amendment to the rule for determining monetary fines for commercial banks and their administrators, the maximum 1% limit is not a ceiling. Under the current rule, a bank paying a maximum of 0.1% will have to pay each time if it violates it again.To make it more impressive, the new draft tariffs will see the largest capital TBC Bank pay 65 million if a 1% sanction is imposed, and the smallest - Silk Bank - half a million.The draft amendments mention the harmonization with EU legislation in the explanatory memorandum and refer to the document within the framework of the relevant EU legal regulation, namely Directive 2013/36/EU of 26 June 2013 on the prudential regulation of credit institutions (CRD).Previously, harmonization was also announced in the area of ​​transparency. The supervisor intends to fully disclose information on fines in the future, just as it has already done on AML violations.

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The prices for mining and quarrying increased by 4.6 percent compared to September 2024, resulting in a 0.3 percentage point contribution to the overall monthly PPI change. In the same period, the prices for manufactured products decreased by 0.8 percent, contributing -0.62 percentage points to the monthly index change. Within the group, a noteworthy price decrease was registered for food products (-3.5 percent). Besides, the prices increased for electricity, gas, steam and air conditioning by 2.1 percent, contributing 0.22 percentage points to the monthly index change.The annual PPI rate was mainly affected by price changes for the following products:  Mining and quarrying: the prices were 29.7 percent higher, contributing 1.7 percentage points to the overall annual index change. Within the group, the prices were higher for the subgroup of metal ores (35.9 percent); Manufactured products: the prices increased by 5.3 percent, contributing 4.32 percentage points to the overall annual index increase. There was a notable increase in the prices for the following subgroups: food products (6.6 percent) and basic metals (11.8 percent); Electricity, gas, steam and air conditioning: the annual price increase amounted to 4.4 percent, which contributed 0.54 percentage points to the annual index change; Water supply, sewerage, waste management and remediation services: the annual price increase amounted to 10.9 percent, which contributed 0.26 percentage points to the annual index growth.

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In the mentioned period, the prices for manufactured products increased by 0.6 percent. Compared to October 2023, the DPPI increased by 3.7 percent. The prices went up for mining and quarrying by 9.8 percent, for manufactured products by 2.4 percent, for electricity, gas, steam and air conditioning by 6.3 percent and the prices for water supply, sewerage, waste management and remediation services increased by 9.2 percent.

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