“Bank of Georgia has issued over GEL 200 million for the SME sector this year. The portfolio amounted to over GEL 550 million, which makes up over 22% of the total credit portfolio. The loan issued by DEG will help us to boost the credit portfolio of SME businesses by 10-15%,” Sulkhan Gvalia, Deputy Chief Executive Officer, Corporate Banking at Bank of Georgia, told The FINANCIAL.

According to Gvalia, the interest rates of loans are expected to reduce in the future.

“The existing interest rates on business loans are in accordance with the current macro-economic conditions. The country is developing quite stably, so we expect a further reduction of interest rates of loans as well as of deposits,” said Gvalia.

“The loan will enable us to enhance access to financing for our SME clients and further increase our competitiveness in the sector,” Gvalia added.

DEG, a subsidiary of KFW, is one of the largest European development finance institutions. DEG and Bank of Georgia have been partners for almost fifteen years.

“We started our track with Bank of Georgia in late 1999. In 2001 our first facility provided was the equity stake, quite small at that time. It was just the start of our facility. We provided a senior loan facility aimed at small and medium enterprises. We have two loans with Bank of Georgia for now in our portfolio. For us it is a very big export as well, exceeding by far USD 45 million. We are glad to have this facility with Bank of Georgia, to have such successful cooperation and we are looking forward to continuing to cooperate with the Bank in the future,” said Irina Schmidt, Vice President at DEG.

According to Schmidt, DEG is looking for several companies in Georgia to cooperate with, in agriculture, the energy sector, especially hydro-power developers, and manufacturing. Schmidt stressed that DEG can finance companies in any sector of the economy. She also added that the Corporation sees a very big potential in logistics as well.

“DEG started its cooperation with Georgia in the late ‘90s. It was a very difficult time. There was no infrastructure. There was very little activity at that time, the banks were too small. Now we are seeing Bank of Georgia listed in London’s prime listing. A second bank - TBC Bank, joined Bank of Georgia this year. We consider this to be a very big success for Georgia as well. We see that the Government is establishing investment funds. So, the situation is getting even better in Georgia. We already consider there to be very good potential in the doing business index and Transparency International, which stressed the measure of good progress in Georgia. So, we are seeing development in this direction. Georgia has become an even better place for local investments and foreign direct investments as well, not only in the financial sector but in different ones to,’ said Schmidt.

In Schmidt’s words, the region is now experiencing quite turbulent times. However, Georgia can rely on avoiding external shocks due to its competitive advantages.

“The situation that arose in Russia and Ukraine this year was completely unpredicted, even up to a year ago. So, external shocks still exist. However, Georgia is not dependent on oil prices, the country is developing its other sectors, so you are not exposed to these shocks, not to such extents as your neighbour countries. As we recall, Georgia was hit by a shock in 2008 but it recovered pretty quickly. Internally, Georgia is in a great state. Compared with other countries in the region Georgia is a better place for investors. Georgia succeeded in creating a very good investment framework. I do hope that Georgia will keep going in the same direction in the future,” Schmidt said.

“DEG is working in more than eight emerging countries, in four continents. We see some countries developing more quickly and others, more slowly. The advantage of Georgia is that it has succeeded in creating a very good attitude for foreign investors, transparency, investment possibilities, the country has speeded up the processes, the Government is very open, ready to discuss and solve problems. It is a very big opportunity that the country has right now,” Schmidt told The FINANCIAL.