The Vice Governor of the National Bank of Georgia, Papuna Lejava, sat down with The CheckPoints to discuss four main risks to financial stability identified by the NBG. These are
1)Uncertainties associated with the duration and economic impact of the covid-19 pandemic,
2) Increase in the country risk premium and its repercussions on the exchange rate and foreign currency debt burden,
3)More than the anticipated adverse impact of the weaker external demand and the virus containment measures on tourism and its adjacent industries,
4)Drop in real estate prices due to weak demand and its adverse impact on the financial sector.
Vice Governor spoke about risks associated with the length of the pandemic and how it is really tough to predict the duration of covid-19 and its impact on the economy.
"The first risk is the duration of the pandemic and its impact on the economy. Of course, this all depends on the adoption of a vaccine. There is much uncertainty around this question. In our base-case scenario, we expect the vaccine to be adopted in the first half of 2021, but in an off chance that this process is delayed, 2021 will also be a difficult year for the world and Georgia as a small, open economy," - he said.
The Vice Governor of the NBG also states that the financial sector and the banking sector were better prepared for this crisis than for the previous ones.
"The impact of this crisis is quite severe in the economy and the financial system. However, the financial sector is quite well prepared and well-positioned,"- he said.
