Q3 2009 Results Overview

A Bright Outlook for EM The 2008 crisis will look like an inflection point for the great EM story - an inflection point as their relative progress will accelerate. Why? Disinflation - even deflation - will reign in the West, meaning very low base rates: Cyclical slack and large output gaps "Japan disease": Private & public balance sheet issues force savings / debt repayments Demographics: Slow or no population growth leads to slack Globalization: Competitive forces and cheap labor have a lot further to run Technology: The digital age has just begun; its deflationary power is huge Governments will counteract these forces with very low rates and some money printing. But to create real inflation it will require a sustained long period of such; In these years "risk" capital will flow East & South seeking growth Low "hard" currency rates will spur and chase - 10+% US$ GDP growth in EM: - Strong domestic balance sheets and momentum mean EM domestic demand intact Competitive advantages and technology transfers will spur investment and productivity Very low hard currency rates are the icing on the cake The result? Current accounts gradually moving to deficit amidst investment booms Oil and other commodity prices, plus local macro policy, will be key cyclical determiners, not Western rates Lobko BANK OF GEORGIA www.bog.ge/ir January 2010 Page 5

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