Government Relocates 850 million GEL Deposits from Commercial Banks to National Bank

The Government of Georgia has withdrawn its GEL-denominated deposits from Georgia-based commercial banks.

As reported by the National Bank of Georgia (NBG), the Georgian Government is reducing its own accounts at commercial banks and relocating the resources to the NBG. Total value of these assets makes up 850 million GEL.

Outflow of the Government’s accounts is one of the reasons why the central bank has announced plans to carry out “emergency measures” to ensure the stability of commercial banks and grow a supply of liquid assets to the financial sector by use of SWAP operation. As for the Government’s assets, the decision was substantiated by plans to mobilize required funds as part of the COVID-10 elimination campaign.

“In order of provide urgent response to the pandemic challenges, the state budget is mobilizing financial resources of about 850 million GEL from commercial banks to the National Bank”, the NBG statement reads.

Another reason why the NBG has announced emergency measures is related to the extremely growing demand for cash. As noted by the NBG, the demand for cash has increased by 700 million GEL amid the pandemic and complicated logistics restrictions.

According to the NBG, as for February 2020, the deposits Larization indicator was 38.3%, that is, 10.16 billion GEL, including the Government’s GEL-denominated deposits.