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Georgia’s Banking Sector Leads the Way in Corporate Governance

TBILISI, June 21, 2022 - Georgia has made significant strides in implementing good corporate governance practices, according to a new report released by the World Bank and International Monetary Fund. The country’s banking sector is at the forefront of this effort, which has helped to strengthen its economic and financial development.

A Decade of Progress

Over the past two decades, Georgia has implemented several key reforms, including adopting new laws on entrepreneurs and three corporate governance codes. However, experts warn that more attention should be paid to improving corporate governance practices at state-owned enterprises.

Key Reforms Implemented in Georgia

  • Adopting new laws on entrepreneurs
  • Implementing three corporate governance codes

The Banking Sector’s Leadership

The report highlights the banking sector’s leadership in implementing good corporate governance and independence requirements in Georgia. However, corporate governance practices at state-owned enterprises are lagging behind.

Recommendations for Improvement

To encourage continued improvement in company practices, the report proposes three main recommendations:

  • Strengthening Corporate Governance: Centralizing ownership function of the state over state-owned enterprises
  • Increasing Awareness and Capacity: Raising awareness among companies to comply with new requirements and regulatory bodies to enforce rules
  • Updating Legal and Regulatory Frameworks: Analyzing and updating the corporate governance legal and regulatory frameworks over the medium-to-long-term

European Union’s Support

The European Union has welcomed Georgia’s progress in corporate governance and pledged continued support for its strengthening and implementation. “Good corporate governance contributes to sustainable economic development by enhancing company performance, increasing access to outside capital, and signaling Georgia as an attractive investment location,” said Catalin Gherman, Deputy Head of Cooperation at the Delegation of the European Union to Georgia.

Accessing the Full Report

The full report is available online at https://openknowledge.worldbank.org/handle/10986/37572.