National Bank of Georgia National Bank of Georgia Giorgi Kadagidze - - PowerPoint PPT Presentation
National Bank of Georgia National Bank of Georgia Giorgi Kadagidze Governor Giorgi.Kadagidze@nbg.ge Georgia At Glance Area: 69,700 sq km Population: 4.4 million (2010) GDP 2010E: US$11.6 billion GDP per capita 2010E (PPP): US$
Giorgi Kadagidze Governor
Giorgi.Kadagidze@nbg.ge
National Bank of Georgia
Area: 69,700 sq km Population: 4.4 million (2010) GDP 2010E: US$11.6 billion GDP per capita 2010E (PPP): US$ 5,057 Average GDP real growth (2000-10): 6% GDP growth 2010E: 6.5% Inflation rate 2010 (average): 7.1% External public debt / GDP 2010: 37.2% Sovereign ratings:
Fitch B+/Stable
S&P B+/Stable/B+
Moody's Ba3/Stable
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National Bank of Georgia
Ease of Doing Business, 2011 (WB-IFC Doing Business Report)
Economic Freedom Index, 2010 (Heritage Foundation)
145 123 89 68 66 59 65 56 51 48 54 17 12 8 5 4
Ukraine Russia Serbia Belarus Montenegro Kazakhstan Turkey Romania Bulgaria Armenia Azerbaijan Estonia GEORGIA Norway USA UK
162 143 96 82 75 74 67 64 63 51 50 26 16 11 8
Ukraine Russia Azerbaijan Kazakhstan Bulgaria Italy Turkey France Romania Hungary Latvia GEORGIA Estonia UK USA Up from 112 in 2005 TI 2010 Global Corruption Barometer: % admitting having paid a bribe within the last 12 month TI 2010 Global Corruption Barometer: % of the surveyed claiming the corruption level has decreased
2% 3% 3% 3% 4% 5% 6% 7% 8% 9% 9% 14% 14% 26% 26% 78%
Romania EU+ Spain United Kingdom Canada Italy United States France Lithuania Latvia Austria Czech Republic Japan Turkey Poland GEORGIA Georgia ranks 1st in the world in terms of the (public perception of the) decrease of the level of corruption
34% 33% 28% 15% 15% 14% 13% 9% 9% 7% 5% 5% 5% 4% 3% 1%
Lithuania Turkey Romania Latvia Poland Czech Republic Italy Japan Austria France EU+ Spain United States Canada GEORGIA United Kingdom
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National Bank of Georgia
29,405 18,837 13,392 11,767 16,998 14,331 12,052 5,179 5,057
10,000 15,000 20,000 25,000 30,000 35,000 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Per capita GDP by PPP around 5000 USD Per capita GDP by PPP in 2010
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National Bank of Georgia
GDP Components of Nominal GDP (9 months 2010)
2,966 3,242 3,644 4,041 4,680 4,907 4,754 5,057 5,324 919 1,188 1,484 1,764 2,315 2,921 2,450 2,591 2,897 1,000 2,000 3,000 4,000 5,000 6,000 2003 2004 2005 2006 2007 2008 2009 2010E 2011F US$
GDP per capita (PPP) Nominal GDP per capita
11.1% 5.9% 9.6% 9.4% 12.3% 2.3%
6.5% 4.5-5.5% 5.5% 6.5%
0% 3% 6% 9% 12% 15%
1 3 5 7 9 11 13 15 17 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F
Nominal GDP (US$bln) Real GDP growth, y-o-y (%) agriculture, 7.2% Manufacturin g & Construction, 13.8% trade services, 13.5% Transport & Communicati
Public Ser. and defense, 11.1% Health care & Education, 10.2% Others, 33.7%
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National Bank of Georgia
2006 2007 2008 2009 2010f 2011f 2012f 2013f Current Account
Trade Balance
Export of goods 1,667 2,088 2,428 1,894 2,454 2,687 2,772 2,947 Import of goods
Services, net 158 161 21 340 535 678 816 977 Tourism, net 146 208 243 294 471 529 617 703 Factor income, net 162 36
Current transfers, net 524 688 1,060 967 1,085 1,165 1,195 1,291 Capital and Financial Account 1,678 2,422 3,079 1,776 1,323 1,532 1,371 1,197 Capital account 171 128 112 183 201 198 218 222 Foreign direct investment 1,186 1,674 1,494 659 618 741 848 956 Other investments 321 620 1,473 934 504 594 304 19 Public sector
890 942 587 282 193
Private sector 432 636 583
312 111 92 Change in Reserves (-decrease) 439 377 131 616 212 184 105
International Reserves 931 1,361 1,480 2,109 2,265 2,449 2,554 2,440 Current Account Deficit (% of GDP)
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National Bank of Georgia
Trade deficit Services (tourism) Current Transfers (Remittances) CA FDI Other investments (public sector loans) Increase in reserves C&F Account
500 1,000 1,500
PLEDGED $4.5 Billion (may increase to $5.5 billion) COMMITTED ~$4.0 Billion DISBURSED ~$2.0 Billion
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National Bank of Georgia
500 1,000 1,500 2,000 2,500 3,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Foreign visitors (thousand persons) Tourism reveneus (mln USD)
200 400 600 800 1,000 1,200 1,400 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Remittances
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National Bank of Georgia
2000
regime since August 2006
restrictions on trade
export 7,200 categories
signed in 2008
comprehensive FTA with the EU and USA
Export Structure* by Country, 2009 Import Structure* by Country, 2009 Export Structure* by Product, 2009 Import Structure* by Product, 2009
Turkey 19.9% Azerbaijan 14.7% Canada 10.3% Armenia 7.8% Ukraine 7.4% Bulgaria 7.3% United States 3.3% Italy 2.1% Germany 2.0% Russia 1.9% Kazakhstan 1.8% UAE 1.5% Spain 1.3% Other 18.8% Turkey 18.0% Ukraine 9.6% Azerbaijan 8.6% Germany 6.9% Russia 6.6% United States 5.2% China 4.0% Bulgaria 3.5% Italy 2.9% Romania 2.6% UAE 2.5% Netherlands 2.3% Brazil 1.7% Other 25.6% Iron & steel 17.4% Beverages 10.9% Gems & precious stones 10.4% Edible fruit and nuts 7.9% Vehicles 7.4% Ores 5.9% Fertilizers 5.3% Fuel 3.9% Live animals 3.0% Pharmaceutic als 2.2% Cement 2.1% Oil seeds 2.1% Wood 2.0% Other 19.4% Fuel 17.6% Machinery & appliances 8.6% Vehicles 7.8% Electrical machinery & equipment 6.8% Pharmaceutic als 4.4% Plastics 3.0% Cereals 2.7% Articles of iron or steel 2.2% Paper and paperboard 2.0% Iron and steel 1.9% Furniture 1.8% Tobacco 1.8% Sugars 1.4% Meat 1.4% Other 36.5%
EU – 21% EU – 30%
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National Bank of Georgia
Sudan Bangladesh Egypt Mauritius Turkey Uganda Estonia Poland Hungary Mexico Japan Chile Spain South Africa Greece Belgium Italy France New Zealand Luxembourg Canada Denmark Norway Switzerland Netherlands UK Germany US 0.0 10.0 20.0 30.0 40.0 50.0 60.0 20,000 40,000 60,000 80,000 100,000 120,000
Georgia
0.0 5.0 10.0 15.0 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Inflation Share of food in inflation
0% 5% 10% 15% 20% Dec-04 May-05 Oct-05 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10
Tradable Non-tradable
6.2% 8.8% 11.0% 5.5% 3.0% 11.2% 4.9% 4.6% 9.1% 4.4%
7.6%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2005 2006 2007 2008 2009 2010 CPI (e-o-p) Core Inflation *
* 2 standard deviation
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National Bank of Georgia
Budget Revenue Performance*
1,606 2,562 3,386 4,602 6,198 7,651 6,760 7,552 7,456 7,834 12.0% 15.6% 17.1% 19.2% 21.6% 24.9% 24.5% 23.6% 24.4% 24.0% 0% 10% 20% 30%
4,000 6,000 8,000 10,000 2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F (GEL mln)
Total Budget Receipts (LHS) Tax Revenues as % of GDP (RHS)
Conventional Fiscal Deficit (Cash Basis)**
0.0%
0%
2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F Fiscal Deficit as % of GDP - Current Path *Consolidated Budget ** GFS86 Classification
General Government Expenditures
1,446 1,977 2,993 3,947 5,719 6,920 6,670 7,084 7,126 7,635 7,940 16.9% 20.1% 25.8% 28.6% 33.7% 36.3% 37.2% 34.6% 31.2% 29.9% 27.5%
4,000 6,000 8,000 10,000 0% 10% 20% 30% 40%
2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F Expenditures (Capital + Current) Expenditures (Capital + Current) as % of GDP
20 40 60 80 100 120 140 160 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Current Revenues/Current Expenditures*
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National Bank of Georgia
Debt Indicators: Below the Prudential Threshholds
Eurobond Performance: Incremental and Sustained Improvement
Flat Repayment Profile: Government External Debt Service
4.6% 6.4% 5.1% 6.0% 3.2% 2.3% 4.6% 4.1% 4.1% 2.6% 11.0% 4.1% 3.9% 4.0% 9.1% 8.8% 7.1% 7.3% 3.4% 2.1% 4.7% 5.0% 5.3% 3.9% 19.0% 8.3% 7.5% 7.8% 0% 5% 10% 15% 20% 2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F 2014F 2015F 2016F
US$ mln
as % of Exports as % of Budget Revenues
Eurobond 96.0 63.8 104.6 10.1 19.1 5.3 20 40 60 80 100 120
Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11
Price Yield
32.0% 25.5% 31.2% 41.2% 43.2% 43.7% 41.7% 38.7% 21.1% 16.8% 23.5% 31.8% 34.3% 35.3% 33.5% 30.9% 48.9% 56.8% 60.9% 80.6% 84.5% 78.9% 73.1% 67.8% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 0% 20% 40% 60% 80% 100% 2006 2007 2008 2009 2010F 2011F 2012F 2013F US$ bln Public Debt Stock Total Public Debt to GDP (%) External Public Debt to GDP (%) External Debt to GDP (%)
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National Bank of Georgia
Affordable Public Debt Stock and Very Low Interest Rate on External Public Debt (in million USD)
Government External Debt Amortization Profile: Flat Trajectory, Easily Affordable Annual Repayment Volumes External Public Debt by Interest Type: Interest Rate Risk Brought to a Minimum
Portfolio Average Weighted Interest Rate as
December 2010
2.04%
100 200 300 400 500 600 700 800
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
US$ mln OTHER LOANS IMF EUROBOND Refinancing limited to 2013, the bulk of Gov’t external debt
creditors on concessional terms
Fixed 68% Variable 32%
Domestic 1,026 21% Multilateral 57% Bilateral 12% Eurobond 10% External 3,937 79%
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National Bank of Georgia
0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Government debt to GDP
Baseline Threshold 0% 5% 10% 15% 20% 25% 30% 35% 40% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Government debt service to revenues and grants
Baseline Threshold
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National Bank of Georgia
Price stability is a main goal of
the NBG
NBG started soft inflation
targeting from 2009
Inflation target – 6% annual Last three year cumulative
inflation, lowest in region.
4 5 6 7 8 9 10 11 12 13
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11
Monetary Policy Rate (2008-2011)
10 20 30 40 50 60 19951996199719981999200020012002200320042005200620072008200920102011201220132014
CPI Inflation (% -YoY)
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National Bank of Georgia
Introduction of FX auctions in 2009 Flexible exchange rate regime Less need for interventions
50 70 90 110 130 150 170 Jan-00 Sep-00 May-01 Jan-02 Sep-02 May-03 Jan-04 Sep-04 May-05 Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 Jan-10 Sep-10
Dynamics of Effective Exchange Rate
Real Nominal
0.0000 0.0050 0.0100 0.0150 0.0200 0.0250 0.0300 14-Jan-05 14-Jan-06 14-Jan-07 14-Jan-08 14-Jan-09 14-Jan-10 14-Jan-11
5 days standart deviation of USD/GEL exchange rate
50 100 150 200 250 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10
NBG FX Interventions
Purchase of USD Sell of USD
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National Bank of Georgia
6 Months T-Bills Discount Rates T-Notes Coupon Rates 12 Months T-Bills Discount Rates Cumulative Issuance by Instrument
8.5% 5.2% 7.7% 6.0% 12.0% 14.6% 12.4%
0% 2% 4% 6% 8% 10% 12% 14% 16% Discount Rate 12 Months T-bills
10.2% 10.3% 14.3% 15.6% 14.4% 13.8%
8% 9% 10% 11% 12% 13% 14% 15% 16% 17% Feb-10 Mar-10 Apr-10May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Coupon Rate T-Notes
10 25 85 125 145 10 80 130 220 280 300 310 70 190 275 342 377 407 423
100 200 300 400 500 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Nov-10 Dec-10 GEL mln T-Notes 12M T-Bills 6M T-Bills
4.1% 6.9% 4.5% 9.3% 11.4% 10.0%
0% 2% 4% 6% 8% 10% 12% 14% Discount Rate 6 Months T-bills
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National Bank of Georgia
2010 2011 2012 2013 2014 2015 2016 GIR in percent of Wijnholds and Kapteyn threshold 129 126 94 120 122 140 127 Lipschitz, Messmacher, and Mourmouras threshold 63 67 54 61 60 67 63 IMF composite indicator 239 251 207 215 209 231 219 Jeanne and Rancierre model 119 117 89 112 116 135 126 Obstfeld, Shambaugh, and Taylor model 98 105 92 85 81 85 85 Memorandum items (in $ million): Gross international reserves 2,263 2,780 2,590 2,488 2,462 2,730 2,902
Sources: Georgian authorities; and staff estimates.
Georgia: Medium-Term Reserve Adequacy
5 10 15 20 25
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Forecast of Current Account Deficit
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National Bank of Georgia 40 million inhabitants, In 500 km radius area
2010 – car export USD 227 mln.
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National Bank of Georgia
with NABUCCO/White Stream – huge potential to transport gas from the Caspian to Europe
January 2009
AGRI
hub – Baku-Tbilisi-Ceyhan (BTC) oil pipeline – Baku-Supsa oil pipeline – South-Caucasus gas pipeline (SCP) from Shah-Deniz – North-South Gas pipeline – Georgia-Azerbaijan Southern Gas (GASP)
years and with Shah Deniz for 20 years
railway – Circa 1.6% of world oil production
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National Bank of Georgia
0.5 1 1.5
2004 2005 2006 2007 2008 2009 2010
tw/h
Net Exports
market expandable to Iraq, Syria and EU countries
TWH)
$300 million by 2018.
line to Turkey
under negotiation
potential utilized so far
transmission capacity to Turkey will reach more than 2000 MW - 15 times more than current capacity
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National Bank of Georgia
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 Kazakhstan Hungary Latvia Montenegro Romania Lithuania Bosnia and Herzegovina Albania Macedonia, FYR Bulgaria Russia Turkey Belarus Ukraine Croatia Serbia Estonia Georgia Armenia Moldova
Capital Adequacy (%)
0.0 20.0 40.0 60.0 80.0 Georgia Armenia Latvia Turkey Moldova Russia Ukraine Lithuania Hungary Macedonia, FYR Bosnia and Herzegovina Bulgaria Romania Belarus Serbia Croatia Estonia
Deposits to GDP (%)
0.0 20.0 40.0 60.0 80.0 100.0 120.0 Armenia Belarus Georgia Serbia Moldova Macedonia, FYR Russia Turkey Bosnia and… Croatia Hungary Romania Lithuania Ukraine Bulgaria Latvia Estonia
Loans to GDP (%)
0% 20% 40% 60% 80% 100% 120% 140% 160%
Bank Assets to GDP (%)
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National Bank of Georgia
Fiscal responsibility
Government expenditure capped at 30% of GDP Budget deficit capped at 3% of GDP Government debt capped at 60% of GDP No budget earmarks
Since 1995, no restrictions on currency convertibility or repatriation of capital & profit Ban on state ownership of banks and on the imposition of price controls
No state-owned banks since 1995 and no price controls since the early 1990s
Ban on an increase in the number of licenses and permits Ban on an increase in the number of state or independent regulators
Currently, independent regulators exist only in financial services, communications and utilities
Means-tested assistance rendered through vouchers and other ways that empower citizens and give them
choice (in healthcare, education, etc), rather than by funding directly state-owned service providers
Deviation from these thresholds would be possible under the negative GDP growth conditions, but the Government would be required to develop a plan aimed at reverting these ratios within three years from the breach
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National Bank of Georgia