Georgia’s current level of household over-indebtedness is not a problem, but the National Bank’s tighter lending rules are a proactive measure aimed at preventing excessive debt burdens in the future, NBG Financial Stability Department Head Davit Utiashvili said. Under the new rules, the 25% PTI limit, previously applicable to borrowers earning up to GEL 1,500, will apply to incomes up to GEL 2,000 from February 1, 2027, and up to GEL 2,500 from September 1, 2027.
Speaking on TV program Business Course, Utiashvili said the recalibration was expected as economic indicators, wages and living costs have increased. The PTI regulation was introduced in 2018, when the average salary was around GEL 1,000, and the threshold was raised to GEL 1,500 in 2022. He said the latest adjustment is intended to maintain roughly the same regulatory framework as in 2018 and prevent a return to excessive lending and difficulties in servicing loans.
“Right now, over-indebtedness is not a problem, but that is also because the National Bank has taken proactive steps in the past,” Utiashvili said. He stressed that the latest measure is designed not for the current situation but for the future, so that people do not take on more debt than they can service without financial difficulties. “This is geared toward the future, and the decision takes effect next year. We will see its results several years from now,” he said.
Utiashvili also said the decision is not related to inflation. He noted that although rising incomes are generally accompanied by higher spending, inflation has averaged around 3% over the past four years, in line with the NBG’s target. According to Utiashvili, the measure is a periodic recalibration of lending requirements that the central bank has undertaken several times as economic conditions have changed.
