Central bank under fire for job cuts

Georgia’s central bank said this week it would cut 100 jobs in a “reorganization,” drawing criticism from both opposition and government figures.

The National Bank of Georgia (NBG) fired the employees when it shed its “banking system oversight” duties, part of changes made to state fiscal policy in March which affected the bank.

Most of the dismissed staff—apart from very new workers—were offered compensation of GEL 20 000–30 000, according to the online news source Civil.ge, but this did not stop them from gathering in protest outside the NGB office in central Tbilisi.

Employees complained they were not given advance notice of the job cuts; bank management said the employees were warned a month ago.

“The job cuts are a result of reorganization of the bank, which is a result of legislative amendments passed by parliament in March,” the acting president of the bank, Davit Amaghlobeli, told reporters on June 30. “The NBG’s two major priorities before that amendment were monetary policy and oversight of the banking system. This latter function was lifted from the NBG as a result of the legislative amendments, so that naturally led to job cuts.”

The sackings took on political overtones when parliamentary vice-speaker Mikheil Machavariani called the NBG boss “incompetent.”

Machavariani, a ruling party MP, said the bank was actually supposed to form a subunit to oversee the banking system, so jobs should not have been cut over the organizational changes.

The March amendments state that a financial monitoring service should be created as a subunit to the NBG, rather than the bank directly overseeing the private banking system, according to parliament’s website.

The change was meant to prevent money laundering and improve administrative procedures. But critics say it improperly weakened the central bank.

Law expert and former opposition MP Vakhtang Khmaladze, who helped draft Georgia’s modern constitution, said the amendment effectively gutted the NBG’s role as set out in the constitution.

“I think these norms are unconstitutional,” he commented. “As for the job cuts, this was just a logical consequence, even though this could have been done differently. The reason might be that NGB or the government wants to substitute those experienced employees by people loyal to the government.”

Former economy minister Lado Papava also criticized the March amendments for “institutionally downgrading” the status of the NBG.

Bank representatives were not able to comment yesterday.