Failures of Larisation

At the beginning of 2010, the president of the National Bank of Georgia Giorgi Kadagidze stated that his priority for the year would be Larisation, whereby all loans of deposits would preferably be made in GEL. That meant an increase of the GEL monetary market and a decreasing of dollarisation but, ultimately, the results of this policy are not particularly encouraging. For a couple of months, the move appeared positive for NBG but eventually the situation reversed again. By September 1, 2010 the coefficient or dolarisation of the country is around 75% and almost 90% of deposits are made in a foreign currency in the country. Commercial loans issued by the banks of the population are mostly made in a foreign currency. The analysts think that this trend is a result of various factors. Businessmen do not generally deal in GEL, for example in real estate, most matters are considered in USD. In Georgia, imports are developing very fast and it is also a favourable environment for foreign currency.