German economic team in Georgia

The German economic team in Georgia recently presented the results of its annual monitoring of the financial sector. According to the annual financial sector monitor, presented by the German Economic Team Georgia, the banking sector is well-capitalized and profitable.

The assessment of the financial sector demonstrates the strengths and identifies significant challenges for market development.

The team announced that as a result of its monitoring the National Bank of Georgia's regulation on liability lending has helped to eliminate risky borrowing patterns among microfinance institutions. They noted that dollarization is a major factor in banks' insecurity and undermines the anti-inflation regime. After the depreciation of the GEL, it continued to emerge as a political problem, though prudent measures are already tough.

Alexander Lehmann, Financial Sector Expert said that the introduction of inflation targeting regime has laid the foundation for a gradual reduction in the use of foreign currency in the financial system.

“The banking sector has served past growth well. Going forward, new technologies in finance (fintech) offer opportunities for wider access to credit. Local bond markets could meet the need for longer-term finance in Lari,” said Lehmann.

The German economic team has been advising the Georgian government on economic policy since 2014. It is funded by the German Federal Ministry of Economy and Energy and implemented by consulting firm Berlin Economics.

The German Economic Team Georgia provides independent advice to the Georgian Government and its institutions. The dialogue on economic policies aims at supporting the transformation process of the Georgian economy and is drawing upon German and international experience.

The GET Georgia cooperates with well-known economic research institutes in Georgia and stays in close contact with international organizations and civil society. Furthermore, GET Georgia supports the German government, German companies and other German organizations by providing know-how and detailed information on the economic situation in Georgia.