Georgia is considering launching a development bank to boost key sectors of its economy, but the proposal has sparked debate over risks, transparency and the potential for costly mistakes.
Georgia’s government is exploring the creation of a so-called “Development Bank of Georgia,” a state-backed financial institution designed to support sectors that struggle to access funding. While the idea is not new globally, it has drawn fresh scrutiny after the International Monetary Fund (IMF) warned that such institutions can either drive growth or create long-term financial problems.
A development bank differs significantly from a traditional commercial bank. Unlike high street banks, it does not aim to maximise profit or compete for everyday customers. It typically does not take deposits and instead focuses on financing long-term or higher-risk projects, such as infrastructure, agriculture or small and medium-sized enterprises (SMEs), where private lenders are reluctant to step in.
In theory, this fills an important gap. For example, if small farms or growing businesses cannot secure affordable loans, a development bank can provide targeted support and stimulate economic activity. This is one of the main arguments behind Georgia’s initiative, particularly as the country looks to strengthen domestic production and reduce economic vulnerabilities.
However, timing and structure are key concerns. The government says Georgia’s economy is currently relatively stable, with strong foreign reserves and no urgent need for external financing. This raises a central question: is a development bank necessary now, or is it a long-term policy tool being introduced without a clear immediate need?
International experience offers both inspiration and warning. Germany’s KfW is often cited as a success, supporting innovation and green energy with strong governance and transparency. By contrast, Brazil’s BNDES has faced criticism over political influence and a lack of accountability, while similar institutions in other countries have accumulated losses that ultimately fell on taxpayers.
This is exactly where the IMF’s warning comes in. Without strict oversight, clear objectives and transparency, a development bank can become vulnerable to political pressure, funding projects based on influence rather than economic value. Another concern in Georgia’s case is that the institution may not fall under the supervision of the National Bank, raising further questions about who will regulate and monitor its activities.
The potential implications are significant. A well-managed development bank could unlock investment, support businesses and accelerate economic growth. However, a poorly designed one could distort the market, increase public debt and damage trust in financial institutions.
China’s ruling Communist Party is stepping up oversight of technology firms, internet platforms and digital finance in a sweeping drive to ta...
A wave of bomb threats targeting passenger flights has disrupted air travel across Europe, forcing diversions, airport closures and fighter jet esc...
U.S. President Donald Trump says Washington will end its annual financial and military aid to Israel by the end of 2026, under an agreement he clai...
Iranian parliament speaker Mohammad Bagher Ghalibaf says the U.S. must act to prevent war after Tehran sent a “strong and rational response” to Washington. Meanwhile, U.S. forces have reportedly carried out limited strikes against Iranian targets, including Qeshm Island,
Hundreds of millions of U.S. citizens head to the polls on 3 November to elect the House of Representatives and Senate. How they vote could influence the direction of Donald Trump’s remaining 26 months in office and the outcomes of the Ukraine and Iran conflicts.
A six-day humanitarian ceasefire in the Russian-held Ukrainian town of Oleshky ended on Sunday, 1 November, after facilitating aid deliveries and civilian evacuations.
Kyrgyzstan has emerged as Central Asia’s fastest-growing economy, fuelled by a construction boom, public investment and trade linked to Russia. But with Western sanctions tightening, can the country sustain its rapid growth?
Russia airstrikes on a school used as a humanitarian aid distribution point in southeastern Ukraine's Zaporizhzhia region killed at least 26 people, including rescue workers and police officers, Ukrainian officials said. Another 27 people were reported missing.
A new book examining Azerbaijan’s military strategy, technology and operations during the Garabagh wars has been unveiled in Baku, offering insights into the country’s victories and lessons for modern warfare.
Iranian parliament speaker Mohammad Bagher Ghalibaf says the U.S. must act to prevent war after Tehran sent a “strong and rational response” to Washington. Meanwhile, U.S. forces have reportedly carried out limited strikes against Iranian targets, including Qeshm Island,
Tajikistan has banned electronic cigarettes and nicotine delivery systems, becoming the latest Central Asian country to outlaw their production, import and sale as part of a wider push to protect public health.
Kyrgyzstan has emerged as Central Asia’s fastest-growing economy, fuelled by a construction boom, public investment and trade linked to Russia. But with Western sanctions tightening, can the country sustain its rapid growth?
Armenian Prime Minister Nikol Pashinyan said the government plans to publish a draft of the country's new constitution in November, with public consultations to follow, as constitutional reforms remain a key issue in efforts to secure a final peace agreement with Azerbaijan.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment