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ISET Economist Blog

A blog about economics in the South Caucasus.
Jun
30

Mortgage Subsidy – Encouraging Borrowing in the Midst of a Crisis

On 28 May, Georgia announced its fourth anti-crisis plan, in which the government will subsidize 4 per cent of the interest rate of mortgage loans for five years. The subsidy will be issued for loans not exceeding 200,000 GEL and will only apply to those taking mortgages for the purchase of residential apartments that are newly built or under construction, from 1 June 2020 to 1 January 2021. The state will also ensure the completion of ongoing construction. Moreover, the state will issue loan guarantees on mortgages to the amount of 20 per cent of their ...
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Jan
31

Recent Monetary Policy Measures and Lending Regulations — the Effect on Georgian Lending Patterns

High and rising levels of foreign currency indebtedness have been an important topic in Georgia over the past several years. To address this issue and protect borrowers from currency risks, the National Bank of Georgia (NBG), as well as the Georgian Government have implemented regulations to hinder excess indebtedness. Let’s have a look at the timeline (Figure 1) of recent lending regulations and the accompanying monetary policy measures and observe their impact on changing lending patterns in the Georgian economy. Figure 1. Timeline of lending regulatio...
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Apr
22

An Egg Today? Or a Hen Tomorrow? Credit Regulations in Georgia

“We do not need people who will get credit to buy a refrigerator and TV, and end up in the black list” – Giorgi Kobulia, former Ministrer of Economy and Sustainable Development of Georgia “Long-term financial stability gains are always worth the short-term costs” – Koba Gvenetadze, Governor of the National Bank of Georgia Around two years ago, ISET-PI published a blog article on the problem of over-indebtedness in Georgia. The article stressed the idea that due to notably increased access to finances, an aggressive marketing campaign provided by financia...
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Jun
26

In debt and broke in Georgia

  An individual living in Kutaisi took a 1500 USD real estate secured loan from one of the microfinance institutions in 2011 and had to pay 75 USD interest rate for the following 6 months. The purpose of taking this loan was to finance treatment of her child. She was unable to cover monthly payments and prolonged the term to 10 month, but failed to cover this payments again and was fined several times. In the end, loan was restructured and monthly interest raised to 83 USD, while the amount of total loan nearly doubled to 2700 USD. As a result, she ...
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