National Bank of Georgia's decision on sanctions raises doubts about financial stability - IMF
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IMF on sanctions and the National Bank of Georgia
According to the International Monetary Fund, after the amendments to the law on the National Bank of Georgia on changing the approach to international sanctions, it raises additional concerns.
“The recent change of rules on how the bank will comply with international sanctions raises concerns about financial stability, which is the main goal of the program implemented by the IMF in Georgia. Given the new processes that have been developed since the first review of the program, the team and management are spending additional time to find a way to ensure that the program’s objectives continue to be met,” says an International Monetary Fund spokesperson.
Also, as the fund explains, the program it supports in Georgia has not stopped. Approval of the second tranche of the three-year program for Georgia was postponed in June. The reason for the postponement was the amendments to the Law on the National Bank approved by the Parliament, according to which the position of the First Vice President was created in the National Bank. If necessary, the first vice president also performs the duties of the president. After the position was approved, it was filled by former Georgian Economy Minister Natia Turnava.
“This jeopardized the independence and reliability of the National Bank of Georgia and contradicted the recommendations of the IMF team,” his representative told Voice of America.
The National Bank of Georgia has amended the rules of the sanctions regime amid a high-profile scandal involving former Georgian Prosecutor General Otar Partskhaladze, who was subjected to international sanctions for his ties with the Russian FSB. At first, the National Bank blocked all his accounts, but then changed the decision.
The National Bank explained that the sanctions regime can be applied to Georgian citizens only if a court in Georgia has issued a guilty verdict. On the same principle, the sanctions regime will be applied to a legal entity, the share of which is owned by a citizen of Georgia, who fell under the sanctions.
This change was preceded by a statement by Georgian Dream Chairman Irakli Kobakhidze, who called the National Bank’s decision to restrict Partskhaladze’s access to accounts unconstitutional and violating the principle of presumption of innocence.
On September 14, the United States imposed sanctions against Otar Partskhaladze. This is related to his business activities and cooperation with the Russian FSB. Before the official announcement of the decision, the media reported that a “Georgian-Russian oligarch” was among those subject to sanctions.
