National Bank of Georgia keeps countercyclical capital buffer cyclical component unchanged and raises unhedged foreign currency loan threshold to GEL 1 million

The National Bank of Georgia published a financial stability update in which the Financial Stability Committee left the cyclical component of the countercyclical capital buffer unchanged. The joint Financial Stability and Monetary Policy Committee also reduced by 5 percentage points the upper bound of the temporarily increased reserve requirement on foreign currency liabilities, returning it to its previous level. Separately, the Financial Stability Committee raised the threshold for unhedged foreign currency loans to GEL 1,000,000 from GEL 750,000. As of March 2026, the banking sector maintained healthy capital and liquidity indicators. Annual loan growth, excluding exchange-rate effects, was 14.9% in March and was driven mainly by business lending. In the first quarter of 2026, the credit-to-GDP ratio remained below its long-term trend and the gap stayed negative, with strong economic growth widening that negative gap. The committee expects the ratio to move gradually toward its long-term level as credit activity remains sustainable and economic growth normalises. Commercial banks continue gradually accumulating the neutral component of the countercyclical capital buffer. The update also notes that global financial conditions were relatively stable over the past year but tightened moderately after the outbreak of conflict in the Middle East, with risks from commodity market shocks, firmer global inflation expectations and further tightening in financial conditions. The National Bank of Georgia said it will continue recalibrating reserve requirements in line with macroeconomic conditions and pursuing its long-term dedollarisation plan in coordination with the industry. The higher threshold for unhedged foreign currency loans takes effect on 1 July 2026, and the next Financial Stability Committee meeting is scheduled for 30 September 2026.