An integrated view of deposits, lending, broad money and business finance in Georgia

Key Takeaway

Georgia’s banking system is accumulating money rapidly. Deposit liabilities reached GEL 73.5 billion in June 2026, GEL 12.7 billion more than a year earlier. Excluding exchange-rate effects, annual growth was 22.9%. Broad money M3 stood at GEL 59.9 billion, while the exchange-rate-adjusted loan portfolio grew by 14.5%. These indicators move in the same direction but measure different things: deposits are bank liabilities to customers, M3 measures a broad stock of money available in the economy, and loans represent financial resources already placed by banks.

Resources grew faster than credit

The implied deposit stock a year earlier was GEL 60.8 billion, making nominal growth about 20.9%. The gap between exchange-rate-adjusted deposit growth of 22.9% and loan growth of 14.5% was 8.4 percentage points. This does not mean that 8.4 points were withheld from the economy. Banks must hold liquidity and capital, manage maturity risk, invest in securities and lend only to viable borrowers. The gap does show, however, that the transformation of additional funding into credit is not keeping pace with deposit accumulation.

The lari funding base expanded sharply

Lari deposits rose 34.9% to GEL 41.3 billion. Foreign-currency deposits were equivalent to GEL 32.2 billion and grew 10.6% after removing exchange-rate effects. This gives banks a larger domestic-currency funding base and can reduce currency mismatches. Yet funding is not cheap: the average return on resident lari term deposits was 9.8% in June, creating a relatively high floor beneath the price of lari credit.

Where new credit went

Business loans contributed 6.8 percentage points to the total 14.5% expansion in credit — about 46.9% of total growth. Consumer lending contributed 4.2 points, mortgages 2.7 points and other lending roughly 0.8 points. Almost half of the incremental credit impulse therefore came from business. But business lending itself grew 11.9%, below consumer lending at 20.7% and mortgage lending at 14.7%. A large contribution reflects the size of the existing business portfolio; it does not mean business credit was the fastest-growing category.

The quality of transmission matters

The average interest rate on new lari loans to legal entities was 11.5%, compared with 7.8% in foreign currency. The cheaper foreign-currency rate does not remove currency risk. For firms without matching foreign-currency revenue, exchange-rate movements can erase the interest advantage. At 11.5% in lari, a project needs a sufficiently high operating return after allowing for taxes, risk and the cost of capital.

Credit is not the same as productive investment

Working-capital finance sustains trade and day-to-day operations. Property lending supports asset demand. Finance for machinery, technology, energy efficiency and export capacity can lift future productivity. All of these loans enter the economy, but their long-term effects differ. Aggregate statistics do not fully reveal how much business credit creates new productive capacity and how much supports existing turnover or refinancing.

Why every deposit cannot become a long-term loan

Funding alone is insufficient. Banks need capital, collateral, predictable cash flow and repayment capacity. Firms may also avoid expensive borrowing when demand is uncertain or expected returns do not comfortably exceed an 11–12% lari interest cost. Maturity is another constraint: much deposit funding is short-term, while productive investment often needs multi-year finance. Transforming short liabilities into long loans creates liquidity risk. That is why bank credit must be complemented by bond markets, equity, guarantees and co-financing instruments.

What it means for Georgia

BTU researchers assess the June figures as evidence of expanding financial intermediation: deposits are growing rapidly, the lari base is strengthening, and business receives the largest component of new credit. Yet transmission is not fully efficient. The gap between 22.9% deposit growth and 14.5% loan growth, the slower 11.9% rise in business lending and the 11.5% price of new lari business loans suggest that Georgia’s challenge is no longer only the quantity of money. It is the combined problem of price, maturity, risk sharing and investable project quality.

What to watch next

The decisive indicators are whether the gap between deposits, M3 and credit widens; whether business loans finance investment rather than refinancing; whether long-term lari credit becomes more affordable; whether SMEs and regional firms gain access; and whether capital markets emerge as a meaningful complement to bank lending.

Final assessment

Bank money is reaching Georgia’s economy, but not every lari creates equal economic value. Quantitative transmission is visible in credit growth and the 46.9% business contribution. Qualitative transmission depends on what the credit finances, at what maturity and price, and how much additional output it creates. Those four questions determine whether growing bank liquidity becomes productive capital.

Data and Primary Sources

• National Bank of Georgia – Monthly Review, August 2026: https://nbg.gov.ge/fm/პუბლიკაციები/ანგარიშები/თვის_მიმოხილვა/2026/აგვისტო-2026.pdf?v=7mmob
• National Bank of Georgia – Macroeconomic Review, 31 July 2026: https://nbg.gov.ge/fm/პუბლიკაციები/პრეზენტაციები/მაკროეკონომიკური_მიმოხილვა/master-presentation-for-web-31-07-2026-geo.pdf?v=bj3he
• National Bank of Georgia – Interactive Commercial-Bank Loan Statistics: https://nbg.gov.ge/en/page/loans

Main reference period: June 2026. Derived indicators were calculated from official data.