Banks issue loans in GEL

About two months ago, the National Bank of Georgia started a campaign promoting the issue of loans in Georgian Lari, GEL, the national currency, following recommendations by international financial institutions such as the World Bank and the IMF. It was thought that lending using a foreign currency such as dollars was risky for country’s economy. So the population has been encourages to open deposit accounts in GEL and borrow in GEL. The NBG campaign lasted for around two months before ending abruptly. Banks explaining that they have limited resources in GEL, because deposits are mostly in USD. Most deposits in commercial banks in Georgia are in foreign currencies, primarily in USD. Unfortunately the general population and businesses do not trust the stability of the Lari. Even during the NBG campaign promoting borrowing in GEL, people were rather slow to follow the advice. However the amount of deposits in banks continues to increase and in August 2010 it reached record levels. Currently there is GEL 1.38 billion and USD 1.88 billion on deposit in Georgia's commercial banks. Together with deposits in other currencies, deposits in Georgia's banks total almost GEL 5 billion.