The Board of Executive Directors of the World Bank has approved the Commercial Bank Resolution Preparedness Project for Georgia, under which $35 million in contingent financing (a credit line) will become available for Georgia's Resolution Fund. If necessary, this credit line is intended to finance the bank resolution process.

The loan agreement between Georgia and the International Bank for Reconstruction and Development (IBRD) was signed today by Lasha Khutsishvili, Minister of Finance of Georgia, and Rolande Pryce, World Bank Regional Director for the South Caucasus.

The signing ceremony was attended by Natia Turnava, Governor of the National Bank of Georgia (NBG); Ekaterine Guntsadze, Deputy Minister of Finance; Ekaterine Mikabadze, First Vice Governor of the NBG; as well as representatives of the Ministry of Finance, the National Bank of Georgia, and the World Bank.

The project approved by the World Bank establishes a pre-arranged $35 million credit line for the Resolution Fund. It should be noted that these funds are not intended for use under normal circumstances. The credit line may only be activated upon the occurrence of an event defined by law, specifically when the NBG decides to place a commercial bank into resolution.

Furthermore, the credit line will serve as an additional financial safeguard for the Resolution Fund during the period required to reach its target capacity and will facilitate the timely and effective implementation of a bank resolution process, if required. Project funds may be used exclusively for resolution measures permitted under the law.

According to Natia Turnava, the World Bank’s approval of the project confirms the progress Georgia has made in strengthening its bank resolution and financial stability framework: “The World Bank’s support once again underscores the importance of a sound and reliable bank resolution framework for reinforcing the country’s financial stability and confidence in the banking sector. This project also confirms that the resolution framework established by the NBG is effective, aligned with international best practices, and provides a solid foundation for the timely and effective management of the potential financial difficulties of a systemic bank”.

Bank resolution serves as an alternative to the liquidation of a commercial bank. It involves restructuring a commercial bank in a manner that protects the public interest, including preserving its critical functions such as deposit-taking, lending, payment services, securities market operations, and wholesale funding thereby safeguarding financial stability while providing maximum protection for taxpayers.

Resolution is preferable to liquidation when liquidating a bank experiencing financial difficulties would be more detrimental to financial stability and the country's broader economy than resolving it. The Resolution Fund is a contingency fund designed for use in emergency situations, providing an additional source of liquidity during a resolution process in times of financial stress. Commercial bank contributions have been accumulated in the fund since 2025, while the fund's target capacity is set at 3 percent of insured deposits.

The Resolution Fund is administered by the NBG, while its assets are invested by the Deposit Insurance Agency, acting as the investment manager, in accordance with its statutory authority and the relevant agreement concluded between the NBG and the Deposit Insurance Agency.