TBILISI, DFWatch — The president of the Georgian Bank Association says the interest rate on loans will go down.

Zurab Gvasalia said there is already a trend of falling interest rates on loans, but he thinks it is impossible to decrease the rates immediately.

In recent years, the interest rate on loans has varied between 16 and 21 percent, which is the highest in the South Caucasus region. The high interest rate has created problems for small and medium-sized businesses in Georgia, as well as persons who want consumer loans. It made it impossible for them to function normally. Even though the former government spoke about this problem in the election campaign, nothing has changed. When there was a change of government, many expected that this problem would be handled better.

“The new government may stimulate a trend of decreasing interest rates,” he says, noting that the government does not have influence over the rate directly. Political changes cannot influence interest rates on loans, because its components aren’t related to political changes.

“If we say there is a low interest rate on loans, that won’t be true, but it’s not also true that it creates serious problems for business. It mainly influences small and medium-sized businesses. So it will be really good if there is a falling trend, because the approach towards small and medium sized businesses should also be changed, as the interest rate is not the only thing interfering in their business. They should study how to speak with the same language as the bank sector. We will see and witness that those interest rates for loans will decrease, but small and medium-sized businesses will still have complaints if they do not improve their approach towards the bank sector and improve their qualifications,” Gvasalia says. He thinks the government should stimulate them to do this.

The president of Georgia’s Bank Association says the interest rate should decrease for bank deposits as well. Deposit rates influence rates on loans, he says.

Banks in Georgia have already started reducing their interest rates for loans in the form of a campaign offer.

VTB Bank’s campaign offer for small and medium sized business loans is minus 3 percent.

Archil Chachkhiani, chair of VTB bank’s small and medium business department said at a press conference that the goal of this campaign offer is to refinance loans for small and medium sized businesses by 3 percent reduced interest rates.

The campaign lasts one month – October 31 to November 30. Maximum amount of loan is 250 000 lari, with maximum term of seven years.

To get such a loan it is necessary to have at least 12 months’ experience in business activity and not to have loans in other banks.