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National Bank of Georgia develops temporary supervisory plan to support lending to real economy

Finance Materials 23 December 2020 07:10 (UTC +04:00)
National Bank of Georgia develops temporary supervisory plan to support lending to real economy

BAKU, Azerbaijan, Dec.23

By Tamilla Mammadova – Trend:

COVID-19 pandemic and its containment measures increased financial vulnerability of the household and non-financial corporations’ sectors in Georgia, that negatively affected financial sector as well, the National Bank of Georgia (NBG) told Trend.

"However, measures implemented by the NBG and the government aimed to reduce the negative impact of COVID-19," the bank said.

According to the NBG, the shock significantly hampered economic activity that led to the decline in employment and income. These caused significant financial distress for households and non-financial corporations. In this regard, the loan deferral programs offered by lenders (i.e commercial banks) were critical.

To support the healthy lending to the real economy, the National Bank of Georgia developed a temporary supervisory plan, which implies the use of the capital and liquidity buffers of the banking sector.

"Moreover, against the heightened demand for liquidity, the NBG introduced temporary liquidity support instruments (FX swaps, liquidity instrument to SME financing It should be noted that the NBG's macroprudential efforts have been assisted by the government's actions, which provide support to economic growth and to the sectors most affected by COVID-19," the NBG said.

As the bank said, overall, the credit activity continued, although at a slower pace. The annual growth of credit portfolio is around 11 percent (excluding exchange rate effect).

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