Presidential Administration: “The board of the National Bank can nominate a candidate for the Presidency as soon as today.”

Verdict: FactCheck concludes that the statement released by the Presidential Administration is TRUE.

Resume: In March 2023, the tenure of the President of the National Bank of Georgia, Koba Gvenetadze, expired and Vice President Archil Mestvirishvili assumed the duties of acting President. In accordance with the Law on the National Bank of Georgia, the President of Georgia appoints and removes the President of the National Bank from the members of the National Bank’s board on the recommendation of the Board.

As of June 2023, two of the nine member positions on the board of the National Bank are vacant. The candidates have to be submitted to the Parliament for approval by the President of Georgia. The ruling party and President Zurabishvili are not able to agree on this issue. The Georgian Dream accused the president of attempted sabotage whilst the Presidential Administration claimed that the current number of council members is sufficient in order to nominate the head.

The wording of the Georgian Dream’s statement leaves an impression that it is currently impossible to nominate and appoint the President of the National Bank, something which is not true. Although two seats on the board of the National Bank are vacant, the board is considered legitimate unless the number of members is below five and it is authorised to make decisions, including the nomination of a candidate for President of the National Bank. Therefore, the statement released by President Salome Zurabishvili’s administration is true. In particular, it is possible to elect the President of the National Bank even today and there is no need for an immediate appointment of board members.

Analysis

On 7 June 2023, the Georgian Dream accused President Salome Zurabishvili of sabotage. According to the ruling party, the reason is her decision not to nominate the incumbent Minister of Finance, Lasha Khutsishvili, as a member of the National Bank’s board.

The Presidential Administration responded with a statement the very same evening. According to the President’s Parliamentary Secretary, Giorgi Mskhiladze, there were no doubts about Lasha Khutsishvili’s competence, although questions were raised about the candidate’s independence. Mr Mskhiladze also denied any attempt of sabotage and stated: “The Board of the [National] Bank can nominate a candidate for President as soon as today. The process of the selection of NBG Board members, started by the President, has nothing to do with the nomination and it not hindering anything.”

After a seven-year-long term of the Presidency set forth by the law in March 2023, NBG President Koba Gvenetadze’s tenure expired. After three months, the National Bank still does not have a president and two positions on the board members are also vacant. The reason for this is a disagreement between the President of Georgia and the ruling party.

The board of the National Bank of Georgia consists of nine members in total (Article 7). Its members are nominated by the President of Georgia and elected by the Parliament for a seven-year term. A foreign national may also become a board member. In regard to the position of the president of the National Bank, he/she is appointed and removed by the President of Georgia on the recommendation from the board of the National Bank.

A disagreement between the President of Georgia and the Parliamentary Majority over the issue of the National Bank has been ongoing for years. In May 2019, Salome Zurabishvili nominated Giorgi Khishtovani and Giorgi Mirotadze as board members. However, Mr Mirotadze withdrew his candidacy in October 2019 whilst the Parliament did not vote for Mr Khishtovani to become a board member in June 2020.

As opposed to Giorgi Khishtovani, the former Minister of Economy and Sustainable Development, Natia Turnava, did not face any problem and was elected by the Parliament to join the board of the National Bank in June 2022. Previously in July 2021, the Parliament approved Nikoloz Gagua, Ekaterine Mikabadze and Ekaterine Galdava as board members.

The disagreement between the President of Georgia and the ruling party in regard to the National Bank of Georgia resurfaced in 2023 when Salome Zurabishvili vetoed amendments to the organic law on the National Bank. The amendments envisioned increasing the number of executive members on the board, thereby increasing the number of executive members as compared to the number of non-executive members. According to the conclusion of the International Monetary Fund, this would undermine actionable control. The Vice President of the National Bank, Archil Mestvirishvili, also agreed with the assessment of the International Monetary Fund.

In accordance with the statement released by the Georgian Dream, with her actions [not nominating Lasha Khutsishvili as a member of the Board] Salome Zurabishvili posed a danger to the activity of the National Bank and adding at least one member to the board would make it possible to appoint the president of the National Bank. The statement further reads that the Parliamentary Majority is going to override the President’s veto.

The wording of the Georgian Dream’s statement (“after adding at least one member to the board, it will be possible to appoint the president of the National Bank of Georgia”) leaves the impression that it is currently impossible to nominate and appoint the president of the National Bank, something which is untrue. Although two seats on the Board are vacant, the board is considered legitimate unless the number of members is below five and it is authorised to make decisions, including nominating the candidate for president of the National Bank. Therefore, the statement released by President Salome Zurabishvili’s administration is true. In particular, it is possible to elect the president of the National Bank even today and there is no need for immediate appointment of the Board members.