Tighter PTI regulations by the National Bank of Georgia (NBG) are a direct recognition of the lari’s declining purchasing power and excessive household indebtedness, Giorgi Kepuladze, chairman of the Society and Banks, told BMG.
Kepuladze said the share of non-performing loans in the banking sector remains low, but the NBG has identified potential risks stemming from a significant increase in average household expenses. He said rising prices have reduced the purchasing power of incomes, meaning that a GEL 1,000 monthly loan payment no longer leaves the same amount of disposable income as it did several years ago.
According to Kepuladze, the new regulation will reduce the maximum loan amounts available to borrowers, affecting the growth rate of banks’ loan portfolios, particularly consumer lending. He said demand for financial resources will not automatically decline, although a large-scale shift to the shadow economy is unlikely because the restriction targets borrowers with insufficient income rather than those with poor credit histories.
Kepuladze also said that if the NBG recognizes the decline in purchasing power, the government should take corresponding measures, including reviewing the GEL 300 customs-free limit for parcels and the GEL 100,000 VAT threshold for companies. “Ultimately, introducing such regulation was necessary given the reality created by the deterioration in the lari’s purchasing power,” he said.
