NBG Governor: World Bank support reaffirms confidence in Georgia’s financial stability and banking sector

The Executive Board of the World Bank has approved the Resolution Readiness Project for Georgian Commercial Banks, under which a USD 35 million contingent financing facility (a credit line) will become available for Georgia’s Resolution Fund. If required, this credit line is earmarked to finance bank resolution processes.

According to the National Bank of Georgia (NBG), the loan agreement between Georgia and the International Bank for Reconstruction and Development (IBRD) was signed today by Minister of Finance Lasha Khutsishvili and World Bank Regional Director for the South Caucasus Rolande Pryce.

The signing ceremony was attended by NBG Governor Natia Turnava, Deputy Minister of Finance Ekaterine Guntsadze, NBG First Vice-Governor Ekaterine Mikabadze, and representatives from the Ministry of Finance, the National Bank, and the World Bank.

The World Bank–approved project creates a pre-agreed USD 35 million credit line for the Resolution Fund. Notably, these funds will not be drawn under ordinary circumstances; the facility will only be triggered in statutory contingencies when the NBG decides to initiate resolution proceedings for a commercial bank.

Furthermore, the credit line will serve as a supplementary financial safety net for the Resolution Fund during its target-buildup phase, facilitating the swift and effective execution of any potential commercial bank resolution. The project funds may only be utilised for resolution measures permitted by law.

According to NBG Governor Natia Turnava, the World Bank’s approval of this project reflects Georgia’s progress in strengthening bank resolution and financial stability mechanisms.

“World Bank support underscores once again the importance of a robust and sound bank resolution framework in reinforcing the country’s financial stability and market confidence in the banking sector. This project also demonstrates that the existing resolution framework introduced by the National Bank of Georgia is effective, aligns with international best practice, and creates a solid foundation for successfully managing potential financial distress at systemic banks on time,” stated the NBG Governor.

Bank resolution serves as an alternative to commercial bank liquidation, involving a restructuring designed to safeguard public interest. This includes preserving a bank’s critical functions, such as deposit-taking, lending, payment services, securities market operations, and wholesale funding, thereby ensuring financial stability and providing maximum protection for taxpayers.

Resolution is preferred to liquidation when winding up a distressed bank would pose a greater risk to financial stability and the wider economy. The Resolution Fund acts as a contingency reserve, providing backstop liquidity during resolution proceedings under stress scenarios. The fund accumulates contributions from commercial banks, a process initiated in 2025, with a target fund size set at 3 per cent of insured deposits.

The National Bank of Georgia administers the Resolution Fund, while its assets are invested by the Deposit Insurance Agency (acting as investment manager) pursuant to statutory authority and a formal agreement concluded between the NBG and the Deposit Insurance Agency.