August Brings Positive Returns for Georgian Pension Funds

The commission’s statement highlights concerns over Georgia’s political direction:“Georgia was once a core U.S. partner and a beacon of freedom in the Caucasus. Today, the ruling Georgian Dream party is dragging the country back into Russia’s orbit and deepening their relationship with China and other U.S. adversaries. Over the past few years, Georgian Dream has crippled Georgia’s institutions and further undermined Georgia’s sovereignty by courting Chinese investment while blocking U.S. businesses from Middle Corridor trade and access to Central Asian rare earth minerals. They have jailed opposition, used violence against peaceful protestors, and refused to relinquish their grip on power after elections widely viewed as illegitimate. This poses an immediate and serious threat to U.S. interests in the region.This hearing will examine the global consequences of Georgia’s slide into authoritarianism. Witnesses will also explore U.S. policy options, such as passage of the bipartisan MEGOBARI Act, to assist the people of Georgia as they seek to maintain their independence and longstanding, mutually beneficial relationship with the United States”, - the statement reads.The hearing will examine the global implications of Georgia’s slide toward authoritarianism and explore potential U.S. policy options, including the bipartisan MEGOBARI Act, designed to support the Georgian people in safeguarding their independence and fostering a mutually beneficial relationship with the United States.Testimony at the hearing will include Georgia’s fifth president Salome Zurabishvili, former Defense Minister Tinatin Khidasheli, and Hudson Institute senior fellow Luke Koff.

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The fund reports that 1,667,000 citizens currently participate in the pension program. The total value of pension assets now stands at GEL 7.4 billion, including GEL 1.9 billion in generated income.The figures highlight the continued growth and sustainability of the country’s funded pension system, which provides long-term financial support for Georgian citizens.

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According to the NBG, the monetary policy rate stands at 8 per cent.“As of August 2025, the overall price level in Georgia increased by 4.6 per cent year-on-year. The moderate increase in inflation relative to the 3 per cent target was mainly driven by rising food prices, which are characterised by high volatility. Notably, core inflation, which excludes the most volatile components from the consumer basket, such as food, energy, and tobacco, remained below the 3 per cent target, standing at 2.8 per cent in August. Apart from core inflation, other measures of relatively sticky prices have moderately ticked up, which keeps the risks of inflation expectations noteworthy. Specifically, service sector inflation reached 4.2 per cent in August. Meanwhile, prices of imported goods remain in deflationary territory, largely reflecting the year-on-year decline in fuel prices.As expected under the NBG’s central scenario, inflation is temporarily remaining above the target level and is projected to average around 3.8 per cent in 2025. Despite current inflation being primarily driven by temporary supply-side factors, the NBG still chooses a cautious stance to prevent the ongoing price increases from getting entrenched in long-term inflation expectations. Consequently, inflation is projected to stabilise around 3 per cent over the medium term.At the same time, as anticipated, economic activity is exhibiting a gradual convergence toward its long-term trend, thereby mitigating demand-side pressures on prices. Specifically, economic growth amounted to 6.5 per cent in July. The normalisation of aggregate demand toward its long-run trend is further supported by tighter financial conditions, as reflected in prevailing market interest rates.Amid elevated global uncertainty, inflation risks, both to the upside and downside, remain noteworthy.Accordingly, the Monetary Policy Committee considered both high-inflation and low-inflation risk scenarios. On the one hand, U.S. tariff policy remains uncertain, and its final configuration has been revised on multiple occasions. This situation further reinforces global economic fragmentation. As a result, supply chain disruptions may emerge, potentially contributing to the development of a stagflationary environment. Moreover, the re-escalation of geopolitical tensions in the Middle East would generate inflationary risks, as it exerts significant pressure on global oil markets. At the same time, when considering a high-inflation scenario, tendencies in the domestic economy also warrant attention. Specifically, other things equal, a moderate increase in the overall price level above the target is expected to be temporary, driven mainly by base effects and one-off adjustments in food prices. However, if inflation remains above the target for a prolonged period, this could give rise to risks of elevated inflation expectations. The realisation of these risks requires a higher interest rate path compared to the central scenario.On the other hand, the Monetary Policy Committee considered a low-inflation risk scenario, where the realisation of the risks would shape the development of fundamental factors in a way that requires a lower trajectory of the monetary policy rate compared to the central scenario. International food commodity prices exhibit high volatility; however, should prices normalise more rapidly than expected, this adjustment would be transmitted to the domestic market. At the same time, the U.S. dollar index (DXY) remains relatively weak globally. If these dynamics persist longer than anticipated, the combination of an appreciated exchange rate and a declining trend in international food commodity prices is expected to exert downward pressure on headline inflation through lower imported inflation.As a result of macroeconomic analysis and the assessment of existing risks, the Monetary Policy Committee has considered it optimal to maintain a moderately tight monetary policy stance and keep the policy rate unchanged at 8 per cent. Upcoming decisions on the monetary policy rate will depend on updated macroeconomic forecast scenarios and risk assessments.The NBG will use all available instruments to maintain price stability. This means keeping the overall price level increase close to the 3 per cent target over the medium term,” the press release of the National Bank of Georgia reads.The next meeting of the Monetary Policy Committee will be held on November 5, 2025.

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According to the Ministry, this marks the first time an international financial institution has allocated a sovereign loan in Georgian lari, highlighting the strong partnership between the ADB and the Government of Georgia not only in financing investment projects but also in backing structural reforms and sustainable public financial management.The Ministry states that borrowing in GEL aligns with Georgia’s debt management strategy, promoting a balanced mix of foreign and domestic currency debt. This approach enhances economic resilience to external shocks and supports debt sustainability.The programme also aims to improve the quality of vocational education, increase accessibility and inclusiveness, and strengthen institutional capacity, supporting the Ministry of Education, Science and Youth.

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According to Kvrivishvili, the optimization plan has generated budget savings of 700 million GEL through large-scale personnel reductions, decreased procurement and service costs, and more targeted spending on specific projects.“It is very important that this amount will be fully reinvested into strengthening and rehabilitating enterprises, as well as implementing targeted projects,” the minister stated.Kvrivishvili emphasized that the reform will have a significant impact on Georgia’s economy by supporting sectoral development and enterprise growth.“We are also moving forward with the next stages of optimization and preparing new strategies for sectoral and enterprise recovery. The public will be informed about the progress very soon,” she added.

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“Georgia remains a regional energy center, and we intend to increase our transit potential to new levels. Together with neighboring countries, we will continue to strengthen partnerships and introduce new technologies to maintain our role as a reliable energy center,” Pkhaladze said.The Deputy Minister highlighted the Black Sea Submarine Cable project, which aims to connect the South Caucasus and the Black Sea region to the European energy market. She emphasized that addressing challenges such as energy security, renewable integration, and grid reliability requires regional cooperation and knowledge sharing.“Energy is not only a foundation for economic growth but also a pillar of national security and regional collaboration, particularly in green energy, which supplies the majority of Georgia’s electricity. Our policy continues to create a favorable investment environment for green energy, while simultaneously addressing the challenges of network reliability, security, and stability,” Pkhaladze added.The forum welcomed transmission system operators from countries including Denmark, Turkey, Azerbaijan, Armenia, Moldova, and Romania, as well as Canadian energy companies PSCAD and RTDS Technologies, experts from the International Council for Large Electrical Systems (CIGRE), and representatives from Schweitzer Engineering Laboratories (SEL), Batumi Maritime Academy, and Georgian universities.The event underscores Georgia’s commitment to strengthening domestic energy infrastructure while enhancing regional energy integration and fostering investment in sustainable energy projects.

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Lion Finance Group (BGEO LN) shares closed at GBP 71.50/share (- 2.46% w/w and -7.68% m/m). More than 229k shares traded in the range of GBP 69.20 - 74.00/share. Average daily traded volume was 51k in the last 4 weeks. The volume of BGEO shares traded was at 0.52% of its capitalization.TBC Bank Group (TBCG LN) closed the week at GBP 42.95/share (- 1.83% w/w and -11.90% m/m). More than 334k shares changed hands in the range of GBP 42.05 - 44.95/share. Average daily traded volume was 79k in the last 4 weeks. The volume of TBCG shares traded was at 0.59% of its capitalization.Georgia Capital (CGEO LN) shares closed at GBP 23.50/share (+3.30% w/w and +6.33% m/m). More than 288k shares traded in the range of GBP 22.30 - 24.90/share. Average daily traded volume was 132k in the last 4 weeks. The volume of CGEO shares traded was at 0.73% of its capitalization. 

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Equity amounted to USD 123.6 million in Q2 2025, which is 21.3 percent of the total foreign direct investment. Reinvestment amounted to USD 466.6 million and the share of reinvestment is 80.4% of total FDI.The United Kingdom, reaching USD 242.7 million in Q2 2025 (41.8 percent) was the major foreign direct investor country. Türkiye was the second with USD 54.0 million (9.3 percent), followed by Czech Republic with USD 38.3 million (6.6 percent). The share of the three largest investor countries is 57.7 percent of the total investment.The largest share of FDI was registered in the financial and insurance activities sector, reaching USD 327.2 million (56.4 percent) in Q2 2025, real estate activities sector was the second with USD 66.4 million (11.4 percent), followed by the energy sector with USD 54.4 million (9.4%). The share of the three largest sectors in total foreign direct investment amounted to 77.2%.

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