BAKU, Azerbaijan, June 26
By Tamilla Mammadova – Trend:
The COVID-19 pandemic has had negative impact on Georgia's financial sector, but the National Bank of Georgia (NBG) has taken important measures to mitigate its effect, the NBG told Trend.
"We took such emergency steps as smooth provision of liquidity to the financial sector through new temporary instruments, development of temporary supervisory plan and introduction of new mechanism for foreign exchange (FX) interventions," the bank said.
According to the NBG, temporary supervisory plan implied to release the capital and liquidity buffers of the banking sector during the financial stress.
"Lowering the capital and liquidity requirements allows the banking sector to absorb potential losses through these buffers and continue ordinary business activities and funding the economy," the NBG noted.
In addition, as the bank noted, the banking sector created considerable loan loss reserves for potential losses.
"Nevertheless, it is noteworthy that Georgian banking sector is sound and has adequate capital and liquidity, which had been gradually accumulated in the past," the National Bank of Georgia added.
Monetary Policy Committee (MPC) of National Bank of Georgia (NBG) decided to cut the refinancing rate by 0.25 percentage points to 8.25 percent during the meeting on June 24. According to the NBG forecasts, inflation will continue to gradually decline over the rest of the year and will reach the target level in the first half of 2021.
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