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Georgia’s Interest Rates in Retail sector are Lower than in Kazakhstan, Russia And Ukraine

The ISET Policy Institute conducted a survey of “Interest Rates for Retail Credit Products in Europe and Central Asia and Comparison of Credit Portfolio in Banking and Non-Banking Sectors”.

The report reflects the period of April-May 2018 and is based on 48 advanced banking data from transition economies in the South Caucasus, Europe and Central Asia. In addition to comparison of interest rates, research compares the quality of loans issued between Georgian banking and non-banking sectors. 

The results of the study showed that interest rates in the retail sector in Georgia are lower than in Kazakhstan, Russia, Ukraine and in most cases in Armenia, but they exceed the group of Central and Eastern European countries, especially for loans issued in the national currency. However, after adjusting the cost of attracting the necessary funds for issuing the loan, interest rates in the retail sector in Georgia are one of the lowest in comparison with Central and Eastern European countries.

For example, in local currency, the effective interest rate on unsecured consumer loans is 16.5%, lower than the interest rate in Armenia (27.9%), Kazakhstan (24.5%) and Russia (20.6%) and higher than in Romania (11.2 %), Czech Republic (10.1%) and Poland (8.0%). In addition, in terms of the term deposit in Georgian Lari, the interest rate in Georgia is lower than in any unlisted consumer loans in the study. After the monetary policy rates, as a result of local currency, the difference between Georgia and Central and Eastern European countries has been reduced.

As for the quality of loans in banking and non-banking sectors, the study shows that the level of loans in the banking sector is stable despite the number of loans in the non-banking sector, much lower than the analog indicator in the banking sector and has been worse for the last two years.

ISET’s full research in Georgian and English is available on the link: Iset-pi.ge