NBG Presents Fintech Strategy and Regulatory Vision to Fintech Association Member Companies

About three-fourths of the all permits have been issued in four regions of the country, namely: 46.1% in Tbilisi, 12.3% in Kvemo Kartli region, 8.5% in Kakheti region and 6.8% in Mtskheta-Mtianeti region. It should be noted that in January-June of 2025, permissions were issued for the construction of multifunctional residential complexes, trade facilities, hotels, industrial enterprises, objects for agricultural purposes, and other buildings.1 540 objects (10.5% less compared to the previous year) with total area of 1 603.5 thousand square meters (0.2% more compared to the previous year) were completed in January-June of 2025.More than two-thirds of the completed constructions are distributed among four regions of the country, namely: 35.9 percent is located in Tbilisi, 12.6% - in Mtskheta-Mtianeti region, 11% - in Kakheti region, and 8.7% - in Kvemo Kartli region.

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The number of visits by international visitors from above-mentioned figure amounted to 1.6 million, 7% higher compared to the same period of 2024.In the II quarter of 2025 the number of international visitors equaled 1.4 million, which is 8.1% higher compared to the same period of the previous year.In the reporting period, international visitors made 1.3 million tourist-type visits, which is 10.7% higher compared to the same period of the previous year.80.1% of international visitors were only tourists. The share of only excursionists amounted to 15.8%, while 4.2% of visitors were both tourists and same-day visitors.In 2Q2025 the largest number of visitors (309.4 thousand visitors), amounting to 22.4 percent of the total number of visitors, was from Russian Federation. Turkey was on thesecond place with 17.6% share and Armenia was on the third place with 10.8% share.The largest number of visits were made by the citizens of Russian Federation (361.8 thousand), Turkey (308.3 thousand) and Armenia (210.0 thousand).The majority of visitors (46.5 percent) were from the age group of 31-50 and the number of women equaled 41.8 percent of the total number of visitors.In 2Q2025 the purpose of the majority of inbound visits (49.4 percent) was holiday, leisure and recreation.The majority of visits were made in Tbilisi and Adjara A/R, 928.3 thousand and 629.8 thousand, respectively. The chart below illustrates the distribution of visits by the visited regions.In the II quarter of 2025 the average number of nights spent during the visits equaled 5.30 nights, which is 4.7% higher than the same figure of the II quarter of 2024 (5.06 nights). 78.1% of visits was repeating visit.The expenditures during the visits made in the II quarter of 2025 equaled 3.5 billion GEL. The indicator is 0.6% higher compared to the same period of the previous year. Average expenditure per visit decreased by 6% compared to the II quarter of 2024 and amounted to 2,116.8 GEL.

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As of June 2025, the overall price level in Georgia increased by 4% year-on-year. The moderate increase in inflation compared to the target level of 3% is mainly driven by rising food prices. This partly reflects developments in international food markets and the base effect from last year's low inflation. Notably, inflation expectations remain stable. Service sector inflation, which tends to be stickier and reflects long-term inflation expectations remained below the 3% target, stood at 2.3%. Core inflation has also remained below the target level for nearly two years. In parallel, prices for imported products are deflationary, mainly driven by reduced fuel prices year-over-year. According to the NBG’s central scenario, consistent with the previous quarter’s forecast, inflation in 2025 is expected to temporarily exceed the 3% target, averaging around 3.8%. This outlook largely reflects international developments and base effects from the previous year. Over the medium term, it is expected to stabilize around the 3% target.Economic activity remains robust. According to the preliminary data, average economic growth for the first five months of the year stood at 8.8%. This performance is largely supported by the enhanced productive capacity of the economy, which helps mitigate inflationary pressures stemming from excess aggregate demand. Given the gradual normalization of fundamental factors alongside strong growth in the first five months, the NBG’s central scenario has revised the 2025 growth forecast upward, from 6.7% to 7.4%.Global economic uncertainty remains elevated in the light of ongoing geopolitical tensions. As a result, inflation is subject to considerable risks on both the upside and downside. Accordingly, the Monetary Policy Committee considered both high-inflation and low-inflation risk scenarios. On the one hand, the US tariff policy has been revised several times, the re-escalation of which could significantly exacerbate fragmentation in the global economy. This would lead to disruptions in global supply chains, which would create a stagflationary environment. Similarly, intensified geopolitical tension in the Middle East would elevate regional risk and increase pressure on global oil markets adding to supply‑side inflationary pressures. At the same time, trends in the local economy are noteworthy. In particular, inflationary pressures stemming from strong aggregate demand. The realization of these risks require a higher interest rate path compared to the central scenario.On the other hand, the Monetary Policy Committee considered a low-inflation risk scenario, where the realization of the risks would shape the development of fundamental factors in a way that requires a lower trajectory of the monetary policy rate compared to the central scenario. In particular, against the background of structural changes in the economy, productivity remains at a relatively high level. The scenario also assumes a globally weakened U.S. dollar index (DXY) and a rapid normalization of international food commodity prices. If these tendencies persist, a strengthened exchange rate combined with stable international food commodity prices is expected to exert downward pressure on headline inflation through lower imported inflation.As a result of macroeconomic analysis and the assessment of existing risks, the Monetary Policy Committee has considered it optimal to adopt a cautious approach toward further normalizing the monetary policy rate, keeping it unchanged at 8%. Upcoming decisions on the monetary policy rate will depend on updated macroeconomic forecast scenarios and risk assessments.The NBG will use all available instruments to maintain price stability. This means keeping the overall price level increase close to the 3% target over the medium term.The next meeting of the Monetary Policy Committee will be held on September 10, 2025.

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The export season started in May and is expected to continue until the end of August.The main export market was again Turkey, with an 81.6% share of exports. The decrease in exports is associated with reduced interest from exporters due to the decline in prices in the Turkish market.The top 3 exporters to Turkey were: Bukaf Solutions, Georgia Urban Energy and Adjara Energy 2007. In addition, the main exporter to Armenia was Cross Border Trading.It is noteworthy that 52.6 GWh of electricity was exported to Turkey by the Georgian State Electric System, the purpose of which was to repay the historical debt with Turkey.In addition, export revenues almost halved (-43.8% y/y) and amounted to $19.2 million in the first half of 2025. The decrease is associated with a decrease in both volume and export price. The average export price decreased by 4% annually and amounted to 4.3 US cents per kWh.In the first half of 2025, 0.3 TWh of electricity was transited through Georgia to Turkey, 87.9% of which came from Azerbaijan, and the rest from Russia.According to a study by Galt & Taggart, electricity imports increased by 116.6% year-on-year to 1.0 TWh in the first half of 2025. 78.9% of imported electricity came from Russia, of which 58.6% was intended for consumption in Abkhazia.In total, the amount paid for imported electricity in the first half of 2025 amounted to $25.3 million, which is an average of 2.6 US cents per kWh.It is worth noting that imports to the Abkhazian region are carried out at a special price of 0.1 US cents per kWh, which has a significant impact on the average import price.

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Electricity supply in the first half of 2025 amounted to 7.6 TWh. Of this, 6.6 TWh was domestic generation (- 9.7% y/y), and 1.0 TWh (+13.0% y/y) was imported. In addition, the generation from both hydropower and thermal power plants decreased from domestic sources.The choice between thermal power plants and imports was made based on price.According to Galt & Taggart, the export season in 2025 traditionally started in May. For the last 2 years, exports have been made since April, which was due to high prices in Turkey, increased thermal generation and reduced consumption.In the first half of 2025, the export volume decreased to 0.4 TWh (-41.4% y/y), and the average export price to 4.3 US cents per kWh (-4.0% y/y). As a result, export revenues almost halved (-43.8% y/y) and amounted to $19.2 million.In the first half of 2025, Georgia was still a net importer of electricity, both in volume and value. In the first half of 2025, net imports amounted to $6.1 million and 0.5 TWh."The wholesale electricity price increased by 3.4% annually and amounted to 5.8 US cents. The highest share in the formation of balancing electricity is still held by PPA plants. The number of transactions in the market on the day before was still minimal, although it increased significantly compared to previous periods," - the Galt & Taggart publication reads.

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GCAP today announces that the transaction has closed and the cash proceeds of USD 70.4 million have been fully received. The use of proceeds, in line with GCAP’s 360-degree capital management framework, will be announced together with Georgia Capital PLC’s 2Q25 and 1H25 results, currently scheduled for release on 6 August 2025.As a reminder, GCAP announced its full exit from Georgia Global Utilities back in December 2021, and in accordance with the terms of the deal concluded during the same period, the Spanish holding company Aqualia was also to buy out the remaining 20% stake in Georgia Global Utilities.

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In the last reporting month, 385 loans equivalent to 92 million GEL were issued in USD and EUR (06/2024 – 72 million, 250 loans). The share of foreign currency mortgages in issuances has increased to 23.5% (L/m – 20.5%).Mortgages have become more expensive, both in GEL and in USD and EUR. In the national currency, last year they were issued at 11.6% in GEL, this year it is 13.1%. The annual interest rate on mortgages was set at 7.1% last year, and 8.4% this year.According to commercial banks, the minimum effective rate for a GEL mortgage loan is 15.5%, 10% in USD, and 8.9% in EUR.The mortgage loan portfolio, as of H1/2025, is GEL 12.5 billion, including GEL 4.1 billion denominated in foreign currency.More than half of the portfolio is long-term loans. The short-term mortgage portfolio is GEL 10 billion. Including GEL 2.9 billion equivalent are foreign currency loans.GEL mortgages are issued for a medium term of 10-years. From the fall of 2022, foreign currency will be reduced to 10 years (from the fall of 2022, the maximum mortgage term was 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 severely affected.The 3% corridor provides for a +3% assessment of the borrower's solvency when issuing a variable-rate loan (most foreign currency mortgages issued are a mix of variable and fixed). This means that if the rate increases by 1, 2 or 3%, the mortgagee should not have any problems servicing the loan.

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Limited Liability Company was the most prevalent legal form for economic agents engaged in organization of markets and it held 75.1% share of total number of active markets in 2024, while the Individual Entrepreneur held 21.8%. Other markets had the legal form of Joint Stock Company (2.1%) and Cooperative (1%).95.9 percent of markets were under private ownership in 2024, while rest of 4.1% were owned by the state.In 2024, all economic agents engaged in organization of markets occupied 2 million sq. m area combined. These markets were equipped with 61 vet laboratories, 1059 units of storage facilities with total area of 22.1 thousand sq. meters, and 366 units of cold storage (refrigerators) with 0.8 thousand tons of total capacity.In 2024, 36.1% of active markets were roofed (trade took place inside of buildings), 34.5% were open type markets (trade took place outside of the buildings), and 29.4% were semi-roofed (trade took place inside as well as outside of the buildings).In 2024, sellers carried out trade with food and non-food goods on territory of active markets. 31% of markets traded only with non-food goods, single market traded only with food goods, three market traded with cars as well, while three other markets traded only with poultry and livestock.Trading days differed by markets in Georgia in 2024: daily trade was carried out in 151 markets, while Sunday trade was organized in 25 markets, trade except Sunday was pursued in two markets, and for the rest of markets one-, two-, three-, or four-day trade was carried out during different days of week.The number of market-places in the markets reaches 47.4 thousand, with 36.5 thousand sellers per day on average.In 2024, the average annual number of persons employed in administration of economic agents engaged in organization of markets amounted to 2.7 thousand. 32.4% of these people were females, and 46.9% were based in Tbilisi.In 2024, income of economic agents engaged in organization of markets amounted to 194.4 million GEL. Issuance of trading rights licenses (one-time payment) generated 12 million GEL (6.2%) of this total income, renting out trade stands generated 167.6 million GEL (86.2%), while 14.8 million GEL (7.6 %) was other income. In the same period, total expenditures of economic agents engaged in organization of markets amounted to 115.2 million GEL, of which 47.7 million GEL was salary for employed persons.

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