NBG Opposes Hasty Discussion of Draft Law on National Bank of Georgia; Warns of Risks of the Draft Law

The National Bank of Georgia (NBG) has announced that it is not expedient for the amendments to the Organic Law on the National Bank of Georgia to be adopted by the Parliament in an accelerated manner. According to the amendments, in case of absence of the NBG’s President, a specific person will be appointed to represent him and the number of executive members of the board will be increased. NBG warns that changes will effectively abolish the board’s function as an independent oversight body. The Parliament is discussing the amendments in an expedited manner.

What are the specific changes?

According to the amendments registered in the Parliament on February 1 and approved with the first hearing on February 8, the First Vice President will be added to the three existing Vice Presidents of the Bank, who will deputize for President in the event of the latter’s absence. Previously, one of the three Vice-Presidents had performed the duties of the President. In addition, the number of executive members in the board will be increased from four to five.

The explanatory note explains the need for the changes by stating that in the absence of the President, it is unclear which Vice President will perform the duties of the President and according to which procedures the duties will be assigned to a Vice President.

“In order to remove any theoretical ambiguity and to ensure the smooth functioning of the National Bank as a constitutional body, it is appropriate to clarify the relevant provisions of the organic law,” the explanatory note states.  

NBG’s response  

The National Bank of Georgia clarified that the bank’s activities were never affected by the absence of the President. It also noted that in one case a Vice President performed the duties of the President for 16 months.

“Even if the purpose of the amendments is to regulate the issue at the legislative level, it is possible to appoint one of the three Vice Presidents as the First Vice President and there is no need to add another executive member to the NBG Board,” the bank stated.

“According to the amendments, the Board will have five executive and four non-executive members [one seat remains vacant], which will abolish the role of the NBG Board as an independent supervisory body, as the majority of the Board members will be executive,” the bank said.  

The National Bank pointed out that last year the International Monetary Fund focused on the need to have a majority of non-executive members on the Board. The NBG stressed the need for changes to ensure that the non-executive members of the Board are always in the majority.   

The National Bank also notes that within the framework of the program agreed with the International Monetary Fund, important changes relating to the management of the National Bank must be made after prior consultation with the representatives of this organization. “Otherwise, a three-year program supported by the International Monetary Fund in the country may be hampered.”

“Such changes require detailed analysis, active consultations, including with partner international organizations and, at least, deserve consideration in a normal (not accelerated) manner,” the bank said expressing its readiness to cooperate with the Parliament.

This post is also available in: ქართული (Georgian) Русский (Russian)

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