Last Published: 8/29/2019
Capital Markets and Portfolio Investment
The National Bank of Georgia regulates the securities market.  All market participants submit their reports in line with international standards.  All listed companies must make public filings, which are then uploaded to the National Bank’s website, allowing users to evaluate a company’s financial standing.  The Georgian securities market includes the following licensed participants: a Stock Exchange, a Central Securities Depository, nine brokerage companies, and six registrars.

The Georgian Stock Exchange (GSE) is the only organized securities market in Georgia. Designed and established with the help of USAID and operating under a legal framework drafted with the assistance of American experts, the GSE complies with global best practices in securities trading and offers an efficient investment facility to both local and foreign investors.  The GSE's automated trading system can accommodate thousands of securities that can be traded by brokers from workstations on the GSE floor or remotely from their offices:  https://gse.ge/en/

No law or regulation authorizes private firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation or control.  Cross-shareholder or stable-shareholder arrangements are not used by private firms in Georgia.  Georgian legislation does not protect private firms from takeovers.  There are no regulations authorizing private firms to restrict the investment activity of foreign partners or to limit the ability of foreign partners to gain control over domestic enterprises.

The government and Central Bank (National Bank of Georgia) respect IMF Article VIII and impose no restrictions on payments and transfers in current international transactions.

Credit from commercial banks is available to foreign investors as well as domestic clients, although interest rates are high.  Banks continue offering business, consumer, and mortgage loans.

The government adopted a new law in 2018 that introduced an accumulative pension scheme, which became effective on January 1, 2019.  The government expects that that the new system will boost domestic capital market, as the pension funds will be invested within Georgia.
 
Money and Banking System

Banking is one of the fastest growing sectors in the Georgian economy.  The banking sector is well-regulated and capitalized despite regional and global challenges faced in many neighboring countries.  As of January 1, 2019, 15 commercial banks, including 14 foreign-controlled banks, made up the banking sector in Georgia, with 135 commercial bank branches and 794 service centers throughout the country.  In January 2019, the total assets of Georgian commercial banks were GEL38.8 billion (around USD14.4 billion).  As of early 2019, there were 17 insurance companies and 65 microfinance (MFI) organizations operating in Georgia.  The total assets of MFIs stood at USD 0.5 billion as of January 1, 2019.  Two Georgian banks are listed on the London Stock Exchange:  TBC Bank (listed in 2014) and the Bank of Georgia (2006).

The National Bank of Georgia (NBG) is the central bank of Georgia, as defined by the Constitution.  The rights and obligations of the NBG as the central bank, the principles of its activity, and the guarantee of its independence are defined in the Organic Law of Georgia on the National Bank of Georgia.  The National Bank supervises the financial sector in order to facilitate the financial stability and transparency of the financial system, as well as to protect the rights of the sector’s consumers and investors.  Through the Financial Monitoring Service of Georgia, a separate legal entity, the NBG undertakes measures against illicit income legalization and the financing of terrorism.  In addition, the NBG is the banker and fiscal agent of the government. (www.nbg.gov.ge).

The International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), the U.S. Overseas Private Investment Corporation (OPIC), the Millennium Challenge Corporation (MCC), the Asian Development Bank (ABD), and other international development agencies have a variety of lending programs that make credit available to large and small businesses in Georgia.  Georgia’s two largest banks – TBC and Bank of Georgia – have correspondent banking relationships with the United States through Citibank, N.A. 

Foreign Exchange and Remittances

Foreign Exchange

Georgian law guarantees the right of an investor to convert and repatriate income after payment of all required taxes.  The investor is also entitled to convert and repatriate any compensation received for expropriated property.  Georgia has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement, effective as of December 20, 1996, undertaking to refrain from imposing restrictions on payments and transfers for current international transactions and from engaging in discriminatory currency arrangements or multiple currency practices without IMF approval.  Parliament’s 2011 adoption of the Act of Economic Freedom further reinforced this provision.

Under the U.S.-Georgia BIT, the Georgian government guarantees that all money transfers relating to a covered investment by a U.S. investor can be made freely and without delay into and out of Georgia.

Foreign investors have the right to hold foreign currency accounts with authorized local banks. The sole legal tender in Georgia is the lari (GEL), which is traded on the Tbilisi Interbank Currency Exchange and in the foreign exchange bureau market.

The official exchange rate of the GEL is calculated based on transactions secured on the Interbank Foreign Exchange Market.  Interbank trading with foreign currencies is organized in an international trading system (Bloomberg).  Taking into consideration secured transactions, the weighted average exchange rate of the GEL against the USD is calculated and announced as the official exchange rate for the next day.  The official exchange rate of the GEL against other foreign currencies is determined according to the rate on international markets or the issuer country’s domestic interbank currency market on the basis of cross-currency exchange rates.  The cross-currency rates are acquired from the Reuters and Bloomberg information systems, and the corresponding webpages of central banks.  The information is automatically received, calculated, and disseminated from these systems.

Georgia has a floating exchange rate.  The National Bank of Georgia has said it does not intend to fix the exchange rate regime and does not generally intervene in the foreign exchange market, except under certain circumstances when the fluctuation has a high magnitude.

Remittance Policies

There is no difficulty in obtaining foreign currency, nor are there significant delays in remitting funds overseas through normal channels.  Several Georgian banks participate in the SWIFT and Western Union interbank communication networks.  Businesses report that it takes a maximum of three days for money transferred abroad from Georgia to reach a beneficiary’s account, unless otherwise provided by a customer’s order.  There are no known plans to change remittance policies.  Travelers must declare at the border currency and securities in their possession valued at more than GEL30,000 (around USD15,000).

Sovereign Wealth Funds

Georgia does not have a Sovereign Wealth Fund.
 
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