Who will continue to grow the GEL? - Turnava or Khutsishvili
750,000 million is 250,000 away from the newly increased limit for
foreign currency lending of up to a million.The banking sector expects
lending to be activated. According to investment bankers' analysis,
the dangerous regulation will work the opposite way, it will revive
the market more, including with the development sector slowing down
and the transition to a waiting mode, businesses & clients who intend
to take out a loan but are in no hurry are rushing to make it to
August 1, before the limit is raised.In every research publication,
including the monetary policy document, the National Bank of Georgia
constantly notes that it monitors the market and makes decisions based
on this, whether to tighten or ease regulation or increase or decrease
the monetary policy rate. Accordingly, the market's agitated behavior
was not absent before each increase in the limit.December was the peak
of foreign currency loan issuance, why? Because the limit was raised
from January. Well, December is already an active month, especially in
terms of activating the real estate market, although the limit also
had an effect. In December (2024), the equivalent of 2.4 billion GEL
was issued in foreign currency loans. In the previous and subsequent
months (November, January), respectively, 1.5 billion GEL and 1.13
billion GEL were issued in USD and EUR, respectively. Disbursements
for the period 04/2024-04/2025 (13 months) are 20.5 billion GEL
(equivalent in foreign currency). Monthly disbursements are within the
range of -1.4 – 1.7 billion GEL, if we exclude the peak December, by
2.4 billion.The new limit should reduce foreign currency lending by
$150 million. The regulator’s previous move (increasing to $500,000)
was designed to reduce annual lending by more than $100 million, while
the previous one (to $400,000) was designed to reduce it by $180
million.Davit Rusia, analytical director of the Banking Association,
avoided spoiling the festive mood of the 30th anniversary of the lari
for the public. During his visit to 1TV. GE, he did not say that the
regulation would also apply to lari loans, which is usually expressed
in an increase in lending rates. He suggested that we wait longer for
a pleasant change.“Let's hope for the best. Let's observe the summer
period. What financial inflows will be, how will it affect the
purchasing power of the lari,” - Rusia drew attention to the 42/43%
dollarization ratio of loans, which has stubbornly maintained its
position for a long time and is having a hard time getting down to
41%.According to his expectations, if the banks do not find a new
source of long-term lari, it will be difficult for the ratio to move
from its place for a long time.According to him, only the National
Bank of Georgia and the Ministry of Finance can create a new source.
And there is another source that is not unlimited, but is both
voluminous and long-term. Rusia means the funds of the pension fund by
accumulation, the money that potential borrowers must lend to banks so
that banks lend to us at the optimal rate. If we follow the pension
criteria, the fund should lend at least 14%, because the fund is also
profit-oriented. When investing in lari bonds, it looked at the 13%
limit and chose to buy loan bonds based on this.Considering that banks
manage to attract currency from the international capital market at
4-5% (in US dollars) and 3-3.5% (in EUR, lari still turns out to be
more expensive. The Banking Association of Georgia sees the
possibility of balancing in co-financing the interest. The financier
should be either the National Bank or the Ministry of Finance, or
both.
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