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2010 difficult for Georgian banks

By Messenger Staff
Tuesday, September 1
The International Monetary Fund (IMF) concludes that the economic and financial crisis in Georgia will continue in 2010 as well. Georgian analysts mostly agree, and suggest that the peak of the crisis will be seen at the end of this autumn and the beginning of winter.

According to the IMF prognosis around 70 percent of Georgian banks will have serious problems in 2010. The IMF says that by spring 2009 more than USD 1.7 billion of capital had been withdrawn from Georgian banks. This figure has kept increasing and is now approaching USD 2 billion. This means that the banks will have a deficit of turnover capital in the near future. Deposits have decreased by 40 percent.

It is now very difficult to get a bank loan. The banks now select who they give loans to very carefully and therefore the amount of money disbursed in this way is decreasing. Currently the banks are most inclined to finance trade, but decreases in loan availability eventually decrease trade itself and therefore the reluctance to issue loans is actually undermining the banking sector.

Trade problems might create a budget deficit which will eventually might create panic in consumers or the banking sector, therefore a well-designed, active and efficient policy should be carried out urgently by the National Bank.