The Asian Development Bank (ADB) and Bank of Georgia have signed a loan agreement for a $50m five-year financing package, the proceeds of which will be onlent to small and medium-sized enterprises (SMEs).
The loan is expected to help Georgia expand its SME sector, as well as restore confidence in banks in the wake of the global financial crisis and war in 2008.
ADB director general of Private Sector Operations Department Philip Erquiaga said that the development of small and medium-sized enterprises is crucial for the recovery of the economy in the aftermath of the war and global economic downturn, and this assistance will allow the bank to expand its loan portfolio to small businesses.
In 2008 and 2009, bank lending largely came to a halt as funds from capital markets and foreign investment dried up, and the return of bank lending has only resumed this year. ADB's assistance is aimed at helping the sector continue to recover and provide badly-needed credit to smaller businesses.
SMEs in Georgia employ less than 40% of the country's total labor force. According to ADSB, the inability of SMEs to readily access finance has been a stumbling block to their development and further expansion of the private sector.