A $35 million loan agreement between Georgia and the World Bank has been submitted to Parliament for ratification. Signed in July, the agreement provides financing for the commercial banks’ Resolution Fund operating under the National Bank of Georgia (NBG).
According to the agreement, the loan is denominated in US dollars and carries a variable interest rate linked to SOFR (Secured Overnight Financing Rate). Debt servicing will be carried out through two payments per year. The current SOFR rate is 3.98%, meaning the applicable rate will fluctuate with SOFR.
The NBG says the credit line serves as an additional financial safety mechanism for the Resolution Fund until it reaches its target size. The funds would be used only if financing becomes necessary during the resolution or recovery process of a commercial bank, and are not intended to finance the banking sector at the current stage.
The Resolution Fund was established to finance the resolution of troubled banks, reduce systemic risks and avoid the need to use taxpayers’ money. According to the NBG, commercial banks have currently contributed around GEL 55 million to the fund. Under the existing plan, the fund’s target size should reach approximately 3% of insured deposits by 2032–2033.
