On November 28, the COP29 NGO Coalition issued a statement regarding the “Baku Turn,” highlighting Azerbaijan’s pivotal role in advancing climate action during COP29.
Day: November 28, 2024
On November 28, the Georgian Parliament, with the exclusive participation of the ruling Georgian Dream party members, approved the government’s program entitled “Only with Peace, Dignity, Prosperity to Europe.” The program says, among other things, with regard to the country’s foreign policy, that Georgia will continue on its Euro-Atlantic path. It also mentions the government’s goal of resetting relations with the United States.
The program says that “Georgia will continue to pursue a firm, pragmatic and result-oriented policy” in its foreign relations.
It also says the peaceful restoration of territorial integrity will remain the government’s “top priority.” The document vows that the government will use “all possible diplomatic and legal means at its disposal” to achieve the de-occupation of its territories.
Against the backdrop of Georgia’s deteriorating relations with the EU, the program says that Georgia will continue on its “irreversible” path of Euro-Atlantic integration. “Georgia will continue its efforts to open accession talks with the EU; it will use all means of communication with European partners and try to remove, together with them, all existing obstructive artificial barriers,” the document says, among other promises of EU integration-oriented reforms.
On Georgia’s integration into NATO, the document says, “Georgia will conduct active consultations with members of the Alliance on its integration into NATO in order to support the decisions reflected in the organization’s policy documents.”
On Ukraine, the document says, “Georgia will continue to provide Ukraine with humanitarian assistance within its capabilities and full diplomatic support for its sovereignty and territorial integrity.”
“For the Georgian government, the strategic partnership with the United States is a priority and of special importance,” the program says, expressing “hope and expectation” that the priorities of the Strategic Partnership Charter “will be duly reflected in all directions of cooperation.”
But it notes that “the government’s goal is to achieve the reset of relations with the U.S., which means, in respect of the interests of the sides, the restoration of relations based on equality and fairness, and the renewal and development of cooperation in all directions with full volume.”
Regarding the neighborhood policy, the document says that Georgia will pursue a “balanced” policy based on the principles of “protecting territorial integrity, sovereignty, good neighborliness, strengthening security, supporting peace and stability in the region”. It says, “Georgia will remain the place for our neighborhood where all current issues will be discussed in both bilateral and trilateral formats,” focusing on Georgia, Azerbaijan and Armenia. It also says: “Multidimensional cooperation within the framework of strategic partnership with Turkey and Azerbaijan will continue for the implementation of projects of regional and global importance.”
The document pays special attention to relations with China, stating that Georgia’s strategic partnership with China is of “special importance”. It says that the government will continue high-level visits with the Chinese side, deepen relations between the two countries, with a special focus on economy and trade, etc. It also says that the government will continue its efforts to obtain observer status in China-CEEC (Cooperation between China and Central and Eastern European Countries).
The document, in its section on the economy, also mentions the Anaklia Deep Sea Port project and promises that the port will be operational in 2029.
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- 31/07/2024 – U.S. Pauses USD 95 Million Assistance to Georgian Government
- 03/02/2024 – Government Program ‘For Building a European State’ Presented to Parliament Bureau
After depleting foreign exchange reserves in October, the National Bank of Georgia (NBG) appears to be trying to replenish them by limiting foreign exchange surpluses in the market.
What Is the Move?
On November 27, the NBG’s Financial Stability and Monetary Policy Committee raised the minimum reserve requirement on banks’ foreign currency liabilities by five percentage points. This means that commercial banks in Georgia will have to hold more funds as reserves with the NBG. Previously, banks were required to reserve between 10 and 20 percent of their foreign currency funds. With this change, they will now have to hold more – 15 to 25 percent – of these funds at the NBG.
The National Bank said the move was aimed at preventing excess foreign currency in the market from leading to more dollar-denominated loans; in other words, to promote “larization” and “reduce the structural risks caused by the high level of financial dollarization“ in the financial system. It cited “uncertainty” in October as a factor contributing to the increase of foreign currency in the domestic market.
During the pre-election period, the NBG sold USD 591 million of its foreign exchange reserves, a record for one month. The sale of foreign exchange is aimed at protecting the national currency from devaluation.
“In September-October we noticed that some citizens and companies, who had some fears about the exchange rate, converted some of their current accounts from GEL [national currency] to foreign currencies. As a result, an excessive amount of foreign currency has accumulated in the market, and now we have seen as a kind of risk that the banks might be tempted to give this money [in foreign currency] as loans to citizens and companies,” said Davit Utiashvili, head of the NBG’s Financial Stability Department. [quoted by BM.GE]. According to him, the reason for the NBG’s decision was to prevent excess foreign exchange in the market to be used for loans by commercial banks.
Critics’ Concerns
But this move also means that these funds will be transferred from the market to the NBG’s (rump) reserves, in an apparent attempt to replenish them after the unprecedented sales in October. However, the foreign currency funds of commercial banks are not net reserves of the National Bank.
“In reality, the National Bank made this decision because the reserves decreased significantly in October, and with this move it is possible to replenish the reserves with about 350 million US dollars,” wrote Roman Gotsiridze, ex-president of the National Bank, in social media.
Gotsiridze believes that this method of filling foreign currency reserves is fictitious and will not work. “The reserves created in this way are not net reserves, it only beautifies the picture on paper. This money is the National Bank’s debt to the commercial banks.”
“And we all know the reason why the reserves have fallen below the critical level. This is the result of Georgian Dream’s irresponsible, anti-Western and pro-Russian pre-election campaign. An attempt to partially restore them [the reserves] will cost the economy in the form of overpriced loans and depositors in the form of reduced interest income,” Gotsiridze added.
Further Measures
From 1 January 2025, individuals receiving a salary in local currency will not be able to borrow less than the equivalent of GEL 500,000 in foreign currency, up from GEL 400,000. According to the NBG, the move is again aimed at reducing the dollarization of the market.
This doesn’t directly transfer foreign currency from the market to the National Bank’s reserves, but it may limit foreign currency lending, reduce the surplus in the market, and strengthen the national currency.
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“Georgian Dream” Usurps Power. via @CivilGe https://t.co/r5LrYn5zBr
— Notes from Georgia/South Caucasus (Hälbig, Ralph) (@SouthCaucasus) November 28, 2024