ADB $50m to help Georgia restore confidence in banks
MANILA: The Asian Development Bank (ADB) and the Joint Stock Company Bank of Georgia have signed a loan agreement for a $50 million five-year financing package, the proceeds of which will be onlent to small and medium-sized enterprises (SMEs). The loan is expected to help Georgia expand its SME sector, as well as restore confidence in banks in the wake of the global financial crisis and war in 2008.
"The development of small and medium-sized enterprises is crucial for the recovery of the economy in the aftermath of the war and global economic downturn, and this assistance will allow the bank to expand its loan portfolio to small businesses," said Philip Erquiaga, Director General of ADB's Private Sector Operations Department. In 2008 and 2009, bank lending largely came to a halt as funds from capital markets and foreign investment dried up, and the return of bank lending has only resumed this year. ADB's assistance will help the sector continue to recover and provide badly-needed credit to smaller businesses, which are key drivers of employment, economic growth and development. While an important component of ongoing economic growth, SMEs in Georgia employ less than 40% of the country's total labor force. The inability of SMEs to readily access finance has been a stumbling block to their development and further expansion of the private sector.
With its strong track record and nationwide branch network, Bank of Georgia, the leading universal bank in the country is well placed to effectively utilize this assistance. ADB's support for the banking system and broader Georgian economy is also expected to encourage the return of foreign investment to the country. -PB News