“Thanks to the National Bank’s monetary policy, inflation remains close to the target level,” Natia Turnava, President of the National Bank of Georgia (NBG), stated.

She emphasized that the country’s financial system continues to demonstrate resilience, supported by a well-capitalized banking sector with strong asset quality and adequate buffers. This stability provides confidence that, even amidst rising international uncertainties, Georgia’s financial system will effectively manage various risks.

“Our monetary policy ensures price stability. After 2023, inflation is expected to stay largely below the 3% target. The average inflation rate for 2023-2024 was 1.8%. As of May, inflation stood at 3.5%, which aligns with our forecasts and remains close to the target. The IMF projects that inflation will average around 3.4% this year and return to the target level by 2026. Overall, thanks to our measures, inflation will continue to hover around the target,” Turnava explained.

She also highlighted the importance of the National Bank’s second key objective: promoting financial stability.

“In this regard, the assessment is positive; however, it is important to acknowledge that ongoing efforts are needed across various areas to sustain a healthy financial sector. The banking industry remains well-capitalised, with strong asset quality and ample buffers, giving us confidence that, despite rising international uncertainties, our financial system will continue to effectively manage various risks, as it has done successfully thus far. Additionally, the International Monetary Fund’s report recognises our progress in advancing larization,” stated the President of the National Bank.

Turnava underscored that the NBG’s policies are crucial in neutralising potential risks to financial stability.

“To sustain stability, our policies must mitigate various threats. One such risk is unhedged loans, which can expose the economy to foreign exchange fluctuations. To address this, we continue to implement a consistent larization policy to reduce currency mismatch risks. An equally vital task is replenishing international reserves, which remains our top priority to ensure adequate financial buffers. Favourable recent conditions, especially strong foreign exchange inflows, have enabled the National Bank to significantly balance currency sales, exceeding last autumn’s levels, and we will persist in this effort,” Turnava concluded.