The Financial Stability Committee of the National Bank of Georgia (NBG) decided on October 10 to increase the loan amount to be issued in the national currency from GEL 200,000 to GEL 300,000 from January 1, 2024.
According to Natia Turnava, NBG’s Acting President, this decision aims to protect the currency risk of the population because the interest rates on USD and Euro loans went up due to the tightened monetary policy in the European Union and the USA in the recent period.
The NBG President explained that people will be given loans in the same currency in which they have the income.
“The previous limit set at GEL 200,000 will increase to GEL 300,000. Those people, who have their income in the national currency Georgian Lari, will receive a loan worth GEL 300,000 only in the national currency,” she said.
According to Natia Turnava, hedging is the key factor that stands behind the decision.
“Hedging means protection against currency risks. Hedging against foreign exchange risks implies that a person should have a loan in the currency of the income and not have to convert the salary to another currency every month to deposit in the bank.
Therefore, it is logical to continue the de-dollarization policy, which has been implemented for several years under the NBG leadership, and makes the Hedging policy more complete,” she said.
The NBG Financial Stability Committee said that the bank continues to work to reduce the structural risks caused by the high level of financial dollarization.