According to the statement of the Parliamentary Minority MP, Mikheil Machavariani, the depreciation of GEL which has been going on for several months already will have the most negative influence upon people who have their loans in USD. The number of such people is about 530,000.

FactCheck

took interest in this issue and verified the accuracy of the MP’s statement.

GEL depreciated by 7.3% with regard to USD at the end of 2014. The exchange rate of GEL towards USD varied from 1.73 and 1.76 for most of 2014; however, it started to depreciate at the end of November. According to the data of the National Bank of Georgia, the national currency depreciated even further in January and February 2015 and the official exchange rate of GEL with regard to USD reached 2.26 by 25 February 2015.

The depreciation of GEL has a negative influence upon the purchasing power of the population as Georgia is an import-dependent country and the depreciation of the exchange rate will cause the prices of imported good to increase. It should also be noted that for the part of the population which has its loans in USD and wages in GEL, the depreciation of the national currency makes it more expensive to service the debts as more GEL will be required to cover loans drawn in USD.

According to the National Bank of Georgia,^[1]

the amount of loans distributed in the national economy equalled GEL 11,793 million. The amount of loans taken by residents in foreign currency was GEL 7,047 million which constitutes 60% of the total amount of loans. A total of 42% of the loans in foreign currency were taken by individuals.

Table 1:

 Amount of Loans Distributed in the National Economy as of 01.12.2014

GEL Million	In National Currency	% With Regard to Loans Distributed in the National Economy	In Foreign Currency	% With Regard to Loans Distributed in the National Economy	Total
Loans Distributed in the National Economy	4,745.5	40.2%	7,047	59.8%	11,793
Inter-Bank Loans	94.4	100%	0	0%	94.4
Legal Entities	1,296.5	22%	4,588.2	78%	5,884.7
Individuals	3,354.6	57.7%	2,458.9	42.3%	5,813.6

Source: National Bank of Georgia

FactCheck

addressed the National Bank of Georgia to determine the number of Georgian citizens with loans in foreign currency. According to the National Bank of Georgia, they do not possess data about loans in different currencies. Hence, the data of loans in foreign currency includes loans in USD, EUR and other currencies as well. In addition, the National Bank only possesses data about the number of newly distributed loan agreements which include both long- and short-term loans. Hence, a number of loans distributed throughout the year are short-term loans and are already covered by the end of the year. A total of GEL 6,629 million in loans was distributed in foreign currency in 2014 whilst the number of loan agreements reached 447,806.

Table 2:

 Amount of Loans in Foreign Currencies and the Number of Loan Agreements in 2013 and 2014

GEL Million	2013	2014
Loans in Foreign Currency	6,191	6,629
Number of Loan Agreements	498,461	447,806

Source: National Bank of Georgia

Based upon the data of the National Bank of Georgia, FactCheck

decided to calculate the approximate number of citizens who have their loans in USD. For this, we summed the number of loan agreements distributed in 2014 and those distributed in 2012 and 2013 in amounts more than GEL 5,000. The period of their coverage is more than two years. The number of such agreements reached 117,307. Based upon this calculation, the approximate number of acting loan agreements would be 615,768 by December 2014. According to the data of the National Bank of Georgia, about 97% of the loans in foreign currency from 2012 to 2014 were issued to residents. Hence, more than 90% of the acting loan agreements are issued to residents of Georgia which amounts to more than 500,000.

Table 3:

 Number of Loans More than GEL 5,000 Distributed from 2012 to 2014

Loans in Foreign Currency	2012	2013	2014	Total
Amount of Distributed Money (GEL Thousand)	4,910,484	5,934,591	6,629,167	17,474,242
Number of Loan Agreements	58,926	58,381	447,806	565,113
Number of Loan Agreements Distributed to Residents	57,158	56,630	434,372	548,160

Source: National Bank of Georgia

Conclusion

The amount of loans in foreign currency, taken by Georgian citizens, was GEL 7,047 million by 1 December 2014 of which GEL 2,459 million (42%) were distributed to individuals. A total of 447,806 new foreign currency loan agreements were signed in 2014.

The National Bank of Georgia only possesses information about the newly signed loan agreements throughout the year. A number of these agreements are short-term and the loans are covered by the end of the year whilst others are long-term and the repayment period is more than a year. Hence, it is impossible to determine the number of citizens with their loans in USD by December 2014. However, based upon the approximate numbers calculated by FactCheck,

the number of loan agreements issued to citizens of Georgia by December 2014 was indeed more than 500,000. Hence, the pathos of the MP that the depreciation of GEL has made the loans more expensive for many citizens is correct.

FactCheck concludes that Mikheil Machavariani’s statement: "A total of 530,000 of our citizens have their loans in USD," is TRUE.