A man enters into office of the Georgian National Bank in Tbilisi, June 29, 2015. Photo: Eana Korbezashvili/Civil.ge
Parliament will not finalize adoption of the bill that would remove banking supervisory functions from the National Bank of Georgia (NBG) and transfer them to a separate agency, until “mutual understanding” is reached with international financial institutions, Parliament Speaker Davit Usupashvili said on July 10.
The controversial bill, which has drawn criticism from the President, business associations, opposition parties and a group of civil society organizations, was passed by the Parliament with its first reading in late June; the bill has yet to be confirmed with two separate readings before it is sent to the President for signing it into law; but President Giorgi Margvelashvili has suggested previously that he would veto it. President’s office has also notes that the way how the bill was developed violates Georgia’s commitments under the Association Agenda with the EU as the legislation related to the central bank is being amended without prior consultations with experts from the European Central Bank.
The International Monetary Fund (IMF); European Bank for Reconstruction and Development (EBRD); Asian Development Bank (ADB), and the World Bank have called for keeping banking supervision inside NBG.
These international financial institutions laid out their concerns in details in a joint letter to PM Irakli Garibashvili and Parliament Speaker Davit Usupashvili on June 24, saying that “in Georgia’s case, moving banking supervision out of the NBG does not seem prudent.”
But the letter also says that if the authorities were “determined” to move forward with the bill, it would be crucial to address concerns outlined in the letter.
“We have stated it repeatedly and let me make this clear for everyone once again: the Parliament of Georgia does not intend to finalize work on this legislation until all issues are addressed and until we reach mutual understanding on all principle topics with our foreign counterparts, the international financial institutions… as well as with EU representatives, I want to reassure businesses, political circles, Georgian public, the National Bank employees, those who are following this process and might be worried, nothing that would damage our country and our banking system will come to pass,” Usupashvili said at a session of parliamentary bureau on July 10.
“On the contrary, whatever happens will be aimed at improving the existing legal framework in this sector. Therefore, the work will continue up until the moment when mutual understanding is achieved with the international financial institutions. This is a very important issue. We all understand that Georgia needs the support of international organizations; and indeed, the process has been moving forward in close cooperation with international organizations,” Usupashvili said.
He also said that the Parliament may be ready to consider the bill with its second reading at a session next week.
Although the bill is being amended as a result of discussions within the parliamentary committee for finance and budgetary issues, its key part involving removing banking supervisory functions from NBG will remain unchanged as the bill has already been confirmed with the first reading.
Co-sponsor of the bill GD MP Tamaz Mechiauri, who chairs parliamentary committee for finance and budgetary issues, said during the bureau session on July 10 that a delay to consider the bill with its second reading does not in any way mean that the proposal will be withdrawn.