16.Jun .2020 15:41

TBC Research: FDI in Georgia shrank by -41.7% YoY to USD 165.4mln in Q1 2020


TBC Research published weekly bulletin. According to it, FDI in Georgia shrank by -41.7% YoY to USD 165.4mln in Q1 2020, with decline attributable to uncertainties related to COVID-19 along with one-off factors such as the completion of a BP’s pipeline project and transferring company ownerships from non-resident to resident units. The three countries, accounting for over half of the total FDI in Q1, were UK (44%), USA (17%) and Panama (12%). Financial sector absorbed the largest portion of foreign direct investments (57%), followed by real estate (21%), hotels and restaurants (10%) and communications (8%). Reinvestment of earnings made up slightly above 80% of total FDI inflows, while the debt and equity shrank considerably compared to the same period previous year.

In May 2020 the share of non-resident holdings in government treasuries edged lower and amounted 12.3%, -0.8pp MoM. In absolute terms, in May 2020 non-residents held treasuries with nominal value of GEL 548mln, GEL 14mln lower compared to the end of April 2020. Following a sharp increase from October last year, deterioration of sentiments since the outbreak of COVID-19 is negatively affecting the appetite of nonresidents to hold GEL government securities, nevertheless, sharp outflows are not observed.

The NBG sold 12-month maturity GEL 80mln Treasury Bills on June 11, 2020. Yield for the T-Bills equaled 8.7% (-0.02pp compared to the previous auction of TB with similar duration).

NBG sold USD 29.7mln on FX market on 10th of June with the weighted average rate of GEL per USD coming in at 3.0372. Since March 2020 NBG sold nearly USD 189.7mln via FX interventions. Additional USD 5mln was sold in April by the central bank on the Bloomberg’s B-match platform, which is a new addition of NBG’s toolkit to smooth out excessive volatility of the GEL exchange rate. Size of the central bank interventions through the B-match platform becomes available on a monthly basis.