Alejandro Hajdenberg, the head of the IMF mission in Georgia, responded today during a press conference to a BMG question regarding the IMF's evaluation of the initiative to establish the "Georgian Development Bank." According to Hajdenberg, while similar state financial institutions exist in many countries, there are unfortunately many bad examples of how state-established banks should not operate. He urged the Georgian government to pay particular attention to the quality of governance and transparency when establishing this financial institution, ensuring that the credits provided do not turn into fiscal risks.
Hajdenberg also emphasized that, as of now, the specific concept of the "Georgian Development Bank" has not been fully developed. The IMF is only providing general recommendations, emphasizing that if this financial institution is created, it must have a transparent budget and sound governance, with its funding aimed at supporting small and medium-sized businesses.
"Regarding the Georgian Development Bank, we have discussed this issue within the mission. We understand that many details are still not ready. Even the name ‘Georgian Development Bank’ has not been definitively confirmed. I can tell you that many countries have similar institutions. Unfortunately, there are also quite a few bad examples, so it is important that this organization is properly established and managed. There is certain rationale for the creation of such a bank, especially to address the shortcomings of the private credit market, particularly for financing small and medium-sized enterprises or agricultural businesses, in order to improve access to credit. However, the key is to ensure the proper governance framework. There must be transparency, and operations should be reflected in the budget. A strong governance framework is necessary to ensure that the financing aligns with its intended purposes, to avoid the accumulation of fiscal risks," Hajdenberg stated.
