Former PM criticizes monetary policy

Former PM Zurab Noghaideli, now the leader of the opposition Movement for Fair Georgia, is highlighting what he calls the “incorrect economic policy” of the Government. He thinks that the biggest error it is making is maintaining the stability of the GEL.

According to a party representative in 2004-2007 the GEL rate was maintained by the inflow of foreign currency into Georgia. From November 2007 however the situation changed. Internal confrontation, protest rallies, two elections in January and May, then the Russian invasion and financial crisis resulted in a decrease in investments in the country.

The NBG tries to maintain the GEL rate but it is swimming against the tide. The attempted stabilisation is very expensive and the country is using up its currency reserves doing it. Before November 7, when the GEL rate against the USD was fixed at a different parameter, the NBG spent USD 230 million on keeping it there and later in November an extra USD 100 million was expended for the same purpose. It is suggested that artificially maintaining the GEL rate is damaging the Georgian economy.