Investment News

Investor.ge provides a brief update on investments and changes in government policy that could impact the business environment. Information in this issue was taken from agenda.ge and other sources.

World Bank forecasts Georgian economy to grow by 5.2% in 2024
The World Bank estimates that the Georgian economy will grow 5.2% in 2024, according to its Economic Update for Europe and Central Asia released in early April. World Bank Regional Director in the South Caucasus Rolande Pryce said expected “robust investment” and tourism were forecasted to continue supporting growth despite a slowdown in money transfer inflows.
“Inflation is expected to converge to its 3% target by end-2024, while monetary policy will continue to ease gradually,” she said. “For Georgia, as for other countries in the region, boosting business dynamism will require addressing several challenges, including upgrading the competition environment, reducing state involvement in the economy, improving the quality of education, and strengthening the availability of finance for firms.”

EBRD, USAID sign memorandum on developing Middle Corridor through Georgia
The European Bank for Reconstruction and Development (EBRD) and the United States Agency for International Development (USAID) signed a memorandum on May 16 to develop the Trans-Caspian International Transport Route that connects Central Asia and Europe while passing through Georgia.
The EBRD said the partnership would benefit the route – also known as the Middle Corridor – by expanding trade, green energy, investment in new industries, and transport and digital infrastructure in Armenia, Azerbaijan, and Georgia. “Strengthening the Middle Corridor will create new, transformative economic opportunities across the region and provide an alternative transport route to existing commercial corridors,” the bank said in a statement.
The memorandum seeks to enhance planning, design, and construction of critical energy, transport, and digital and agricultural infrastructure in the region, the EBRD said. It also aims to improve the efficiency of customs, tariff and border operations, attract private capital investment into the South Caucasus economies for the development of the corridor, and adopt the “highest international standards” to promote economic connectivity with Europe and among South Caucasus countries.

National Bank reduces refinancing rate to 8%
The National Bank of Georgia (NBG) on May 22 said it was continuing its exit from a tight monetary policy by reducing the refinancing rate by 0.25 pp, down to 8%, in light of the “low-inflation environment” in the domestic economy.
The body said overall price levels had increased by 1.5% annually last month due to “globally increased oil prices” caused by “acute geopolitical tensions,” while core inflation stood at 2.3%.
“Timely and sufficiently tight monetary policy stance has successfully normalized the inflation of domestically produced goods around the target. Inflation is expected to remain below the target of 3% in the first half of 2024, while stabilizing close to it in the medium term,” the NBG said in its announcement.
The body also noted that despite “positive trends,” “overall uncertainty” had increased and inflationary pressures had risen due to both domestic and geopolitical developments.
“Inflation expectation measures have seen a slight increase. Additionally, the NBG estimates that the gap between economic activity and its pre-pandemic trend has fully closed. As a result, higher-than-expected demand can also trigger inflationary risks. This strong demand is partly driven by increased credit activity. However, according to the central bank’s baseline scenario, economic activity would stabilize around its potential level, with real growth reaching 5.6%. In this case, demand-side inflationary risks would not materialize,” the institution added.

Georgia hosts 57th annual ADB meeting
The 57th annual meeting of the Asian Development Bank (ADB) took place on May 2-5 in Tbilisi with nearly 70 events covering connectivity, climate change, capital market development, artificial intelligence, and green globalization. The four-day event attracted about 3,000 delegates to Georgia’s capital, including ADB senior management, policymakers, private sector representatives, and “leading development thinkers” from Asia and the Pacific.
Under the theme Bridge to the Future, the event focused on key regional issues, including the development of the Middle Corridor. Speaking at one of the events, Economy Minister of Georgia Levan Davitashvili emphasized the importance of regional ties and the promotion of “common and sustainable development” in the face of challenges resulting from the pandemic and geopolitical conflicts. He noted that investments made by the ADB in Georgia, totaling up to $4.5 billion, have helped fund “important” infrastructure projects. Davitashvili also stressed the importance of Georgia’s energy connections, especially the Black Sea submarine cable project, which he said would strengthen regional connectivity.
At another event dedicated to fintech collaboration, Acting Governor of the National Bank of Georgia (NBG) Natia Turnava spoke about the importance of digital banks, noting that the central bank is committed to implementing an instant payments project by 2025. “Since 2022, the NBG has supported the establishment of three digital banks, one of which facilitates seamless transactions with the European Union Economic Area, and the other is the world’s first programmable bank established in Singapore,” she said. Following the panel discussion, a memorandum of cooperation was signed between the NBG and global fintech company Elevandi for the development of Georgia’s fintech industry and “effective sharing” of knowledge and experience.

National Bank adds gold to its international reserves for first time
The National Bank of Georgia (NBG) on April 9 added gold to its international reserves for the first time with a $500 million purchase of seven tons of gold bars from the London Gold Bullion market.
Acting Governor of the NBG Natia Turnava said of the transaction: “Now we are not only increasing the reserves, but also diversifying them, and for the first time in our country, the central bank will include gold in international reserves as one of its reliable and always valuable assets.”
The NBG noted that it plans to move the gold reserves from London to Georgia. The purchase accounts for approximately 11% of the country’s total international reserves.

Georgia, Turkey sign memorandum on energy
Economy Minister of Georgia Levan Davitashvili and Turkish Minister of Energy and Natural Resources Alparslan Bayraktar on May 16 signed a Memorandum of Understanding on Cooperation in the Energy Sector between Georgia and Turkey.
The memorandum was signed during Georgian Prime Minister Irakli Kobakhidze’s visit to Turkey. Per the memorandum, the two countries will share experience in renewable energies, energy efficiency, infrastructure digitization, and reduction of carbon emissions.
Speaking at a joint press briefing during Prime Minister Kobakhidze’s official visit, President Erdoğan also affirmed his country’s readiness to take part in “large projects” in Georgia, including the construction of airports, ports, and transmission lines. He highlighted that bilateral trade between the two countries had reached $3 billion last year and announced “a new target point” of $5 billion. “I believe that we have the potential to reach this point very soon and fully grasp our business opportunities,” he added.
The Turkish president emphasized that his country would continue to make efforts to launch the Baku-Tbilisi-Kars Railway project as “the backbone of the Middle Corridor and the revitalization of the historic Silk Road.” He also expressed a desire to enhance security cooperation with Georgia, including in the areas of combating organized crime and terrorist organizations.

Asian Development Bank allocates €46 million to strengthen healthcare in Georgia
Georgian Finance Minister Lasha Khutsishvili and Asian Development Bank Country Director for Georgia Lesley Bearman Lahm on April 24 signed a €46 million loan agreement to strengthen the country’s healthcare system.
The Ministry of Finance said the deal included increasing benefits offered to citizens for primary healthcare, specialized ambulatory care, and diagnostic services, and was aimed at reducing financial access barriers and improving service delivery at “all service levels.” The ministry added the agreement also involved improving digital information systems for “more effective” management of programs and public spending on healthcare, as well as governance and accountability for service quality.
The first tranche of the loan, totaling €23 million, will be allocated by the ADB this year, while the second part is scheduled to be received in 2025.

Government proposes changes to Pension Agency governance
According to a draft law submitted to parliament by the Ministry of Economy in early May, the government of Georgia plans to take the issue of appointing the governance structure of the Pension Agency under its authority and abolish the existing Investment Council, which is currently responsible for investment decisions for pension assets.
Currently, the Investment Council is composed of four foreign members, who were selected by the Georgian parliament through an international competition. The proposed legislation envisages the abolishment of the Investment Council and its replacement with a 15-member board, which will be responsible for both fund management and the asset investment process by the fund. Within the new board, two members will be directly appointed by the Georgian government and the remaining members will be selected through an open competition; however, unlike the current model, their selection commission will be largely composed of government members.
The proposed bill will also increase the administrative expenses of the Pension Agency by raising the management fee from .5% to .75%.
Currently, the Pension Agency’s assets amount to GEL 4.9 billion, and it represents the pension savings of 1.3 million citizens.

Visa-free travel regime with China launches
As of May 28, Georgian citizens are now able to travel to China without a visa and stay in the country for 30 consecutive days, the Ministry of Foreign Affairs of Georgia announced at the end of April.
Chinese Ambassador to Georgia Zhou Qian noted in a statement that the necessary legal procedures had been completed in early April and was part of growing efforts to increase economic cooperation between the two countries.
For reference, Georgia announced it would also launch a visa-free travel regime for Chinese passport holders in September 2023.
Georgia hosts 1.3 million international travelers in Q1
Georgian Deputy Minister of Economy Mariam Kvrivishvili announced on May 17 that the country had hosted 1.3 million international travelers in the first quarter of the year and registered “record-high” revenues of over $800 million.
Noting that tourism figures had been “fully restored” to pre-pandemic levels and tourism revenue was up 40% over 2021 levels, Kvrivishvili said a “positive dynamic” was also observed in terms of flights through the country’s western Kutaisi International Airport. She added that Tbilisi International Airport had also served more than 337,000 passengers, a 21% increase compared to last year’s figures.
“This year, we were able to introduce several European airlines, including Austrian and Dutch ones, to the country’s airline market. This dynamic has a positive impact on the increase in passenger flow,” she said. She added that flight capacity had increased, with 640 direct flights flying weekly, up 15% compared to the previous year.