President Vetoes Law on National Bank of Georgia

President Salome Zurabishvili announced on February 23 that she had vetoed amendments to the Organic Law on the National Bank of Georgia, saying they may undermine the Bank’s independence.

As adopted by the Parliament, the draft would have increased the number of the executive board members and set the rules for appointing ad interim National Bank president if the position is vacant.

President Zurabishvili believes that such amendments “are neither necessary, nor urgent, nor well-founded,” especially as the process of selecting the NBG’s President is still underway, and she is working to present two candidates for the NBG’s Board.  

“Why do we need an additional vice presidential position, especially when one of the current vice presidents can perform the duties of the president?” President Zurabishvili said, adding: “The question arises whether the government is not satisfied with the candidacy of any [current] vice president and needs to create an additional position/”

President Zurabishvili noted that “there are some doubts that if the Parliament does not support the candidates nominated by the President of Georgia, the law allows the First Vice President to serve as the President of the National Bank for an indefinite period of time.”

“Such doubts should be dispelled; otherwise, the principle of the independence of the National Bank of Georgia may be put into question,” the President said, adding that “I hope that my veto will not be overcome and that my reasoned remarks will be taken into consideration.”

Once the bill is vetoed, the Parliament may decide to vote on the President’s suggested changes or to overcome the veto and pass the original bill with 3/5 majority.

The Parliament adopted the amendments to the Organic Law on the National Bank of Georgia in an accelerated manner on February 9, with 83 votes in favor and 8 against. According to the amendments, 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 National Bank of Georgia spoke against the amendments, clarifying 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.

The NBG also clarified that “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 NBG also noted 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.”

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