National Bank of Georgia: reform program 20092010

1
National Bank of Georgia reform program
2009-2010
Meeting with the International Donor Community in
Georgia DECEMBER 12, 2008

• David AMAGLOBELI
• Acting President

2
The primary objective of the National Bank of
Georgia

• The primary objective of the National Bank of
  Georgia (NBG) is to ensure PRICE STABILITTY.
  Without prejudice to its main objective, the NBG
  shall ensure financial sector stability and
  transparency and support the sustainable economic
  growth.
• According to the law on the NBG, the NBG is
  independent from political processes and neither
  executive nor legislative branches of the
  government have the right to intervene in the
  affairs of the NBG

3
The main responsibilities of the NBG

• Development and Implementation of the Monetary
  Policy
• Development and Implementation of the Exchange
  rate policy
• Maintenance of Financial Stability
• Provision of banknotes and coins for the economy
• Organization and operation of the national
  payment system
• Management of the official international
  reserves
• Government banker and fiscal agent
• Compilation of banking, monetary and external
  sector statistics
• Analytical and research activity

4
The main characteristics of the Georgian economy
before the war

• Strong GDP growth rates
• High but controlled inflation
• Rapid expansion in the domestic credit
• Large current account deficit
• Strong FDI inflows

5
The consequences of the war

• Deposit outflow of more than 13
• Shortage of liquidity
• Increase in the lending risk perception
• Closed access to the international financial
  markets
• Worsened consumer and investor confidence
• Investment outflow
• Disrupted export and import activities

6
The crisis measures implemented by the NBG

• Supplied the banking sector across the country
  with the foreign and local currency banknotes
• Reversed the monetary policy and introduced
  refinancing operation
• Continuously lowered monetary policy rates
• Introduced temporary waiver on the reserve
  requirements and later lower the rate from 13 to
  5
• Banks were allowed to do early redemption of the
  central bank securities (CDs)
• Extended short-term lender of last resort loans
• Introduced the special liquidity facility for
  the soundest banks
• Maintained stability in the foreign exchange
  market to reduce uncertainty
• Participated in the negotiations for the IMF SBA
  

7
Macroeconomic Outlook
8
Reforming the National Bank of Georgia

• Professionalism
• Efficiency
• Transparency
• Credibility

9
Reforming the NBG MONETARY POLICY

• Inflation Targeting as the new monetary policy
  framework from 2009
• Improving Data collection
• Macroeconomic modeling and Analysis
• Policy-making and implementation

10
Reforming the NBG FINANCIAL STABILITY

• Payment Systems reform project
• Cash Operations

11
Reforming the NBG ORGANIZATIONAL DEVELOPMENT

• Capacity Building
• Human resources
• Infrastructure

Reforming the NBG PUBLIC COMMUNICATION

• Public education

12

• THANK YOU
• for
• Attention