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National Bank head: Lari devaluation a reflection of Georgia’s economy

By Gvantsa Gabekhadze
Wednesday, January 28
10% of all medicines in the country have increased in price. Health Ministry representative Valeri Kvaratskhelia states that the medicines are mainly imported from dollar zones. He stresses that in the case of a serious increase in prices, the ministry will get involved. Analysts believe that an increase in prices is expected for many products because of the Lari’s devaluation.

The Georgian Lari is continuing to depreciate in value against the US dollar. According to the recent exchange rate $1 USD was valued at 2 GEL.

Head of Georgia’s National Bank Giorgi Kadagidze states that the unfavorable trend is because of the poor economic development in the country.

“We are facing tough economic challenges, the challenges were especially evident in the fourth quarter when we suffered a decrease in all key elements: export, remittances and tourism,” Kadagidze said after a closed-door meeting in parliament on January 27.

He stressed that the major aim of the National Bank in such a situation was to stabilize prices.

“We must resist an increase in prices due to the current exchange rate. Despite the inflation risk, we have not faced any tangible increase in prices that was caused by other factors, the reduced fuel price among them,” Kadagidze said, noting that in the case of a significant increase in prices, the National Bank has levers to interfere and regulate the situation.

“A monetary committee sitting will be held on February 11 and we are about to take certain decisions,” Kadagidze said.

Kadagidze has stated that the Lari will only return to its former 1.75 GEL against the dollar if Georgia’s economic growth exceeds the economic growth of our trade partner states.

Head of Parliament’s Finance-Budgetary committee Davit Onoprishvili said that Georgia is facing troubles in attracting investments.

“If the government manages to provide serious positive moves with regard to foreign investment, our economy will recover,” Onoprishvili said.

The opposition United National Movement is accusing the government of having a poor economic policy that has caused serious drawbacks. As an example they name the visa restrictions initiated by the government that according to them has affected the flow of investment and tourism.

Economic analyst Demur Giorkhelide stated that the lari will continue to drop to a new low against the US dollar. “Everything depends on the policy of Georgia’s National Bank,” Giorkhelidze said.

“People should have an opportunity to start their own enterprises. It is the main thing. The issue is still unsettled,” he says.