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Georgian banks and business afraid of each other2010-08-31 18:34
According to representatives of Banking Association of Georgia, things are going so well in financial sector that one might expect the banks' credit activity to grow in the nearest time. Georgian business does not share these optimistic assessments, asserting that it is not that easy to obtain money from credit institutions. Why do banks still refuse to extend loans to private sector?
The banking situation seems to be pleasing for both the Georgian and international experts. At the end of July, Fitch, an authoritative rating agency, officially confirmed the improvement of the situation in the Georgian banking sector, having underlined that it is successfully getting over the consequences of financial crisis and the general economic downturn.
Following Fitch, Georgian Banking Association solemnly declared that the sector has accrued enough means for extending loans to private companies. According to the association representatives, Georgian banks have been closing the fiscal month with profit for five months running, while the volume of the accrued deposits has reached 4 billion laris. All these statements sound especially optimistic against the back ground of the previous year, which was closed with a 65-million-lari loss.
Nevertheless, Georgian businessmen assert that they feel no positive changes in the financial sector.
As Director General of Toyota Center Caucasus Irakly Gurchiani has stated in his interview to Business Georgia Internet publication, it has become even more difficult to obtain a loan in a bank than before.
Head of one of the largest Georgian development companies Bageby Citi Group Shota Khatiashvili is complaining that banks are still unwilling to extend loans in the construction field.
What are the reasons of such thriftiness of the Georgian banks? GeorgiaTimes asked economical expert Georgy Khukhashvili to comment on the matter:
- It is true that today, the banking situation seems to be better than several months ago, which is explained by the slight reduction of political risks induced by the economic crisis and military actions of 2008. We haven't yet reached the 2008 level; still, the banking sector has acquired resources that might be spent on business credits. Nevertheless, the availability of these free means does not at all mean automatic facilitation of the credit extension procedure. Economic prognoses in Georgia are not yet sunny enough for the banks to rush to grant loans.