Georgian PM says national currency devaluation is too high
By Tea Mariamidze
Thursday, August 1
The PM made the statement when commenting on the recent currency rate of Lari against the US Dollar and Euro.
According to the official rate of the National Bank of Georgia (NBG), $1 costs GEL 2.9507, while the previous rate was GEL 2.9346. As for the euro, its exchange rate is GEL 3.2889, while the rate was GEL 3.2642 on July 30. Also, Commercial banks are already selling one dollar for GEL 3. Euro is sold for GEL 3.3450- 3.3550 at commercial banks.
Bakhtadze says in May and June of this year Georgia received the highest tourism revenue in its history and there was an expectation to mobilize more revenue from the tourism sector in the economy, which could not be achieved due to recent developments in the country and the Russian ban on flights with Georgia.
“Any analysis shows that the fundamental factors are quite strong today, and therefore, the Gel’s depreciation is too high… The tourism revenues have fallen, but I am sure that with the action plan presented, with the suggestions we have heard from the business, we will be able to overcome these problems,” he said.
The PM noted that the NBG also made explanations about the developments, adding it is an independent body that has its own unbiased opinion.
“It is important for the NBG to control the inflation rate and must interfere when the parameters are changed. Naturally, I have this expectation, and the National Bank has confirmed it. We are open to communication as much as possible. We meet business every day,” he said.
Two days ago, NBG President Koba Gvenetadze said that the recent devaluation of the national currency GEL was caused by external shocks and reduction of the number of tourists in the country.
He also added that the overall macroeconomic environment in the country is positive, and if the exchange rate results in inflation, the National Bank will use all the tools to eliminate the risks.
Ex-minister of economy Giorgi Kobulia believes GEL may continue to depreciate further if the situation is not balanced. According to him, one of the main factors of the depreciation of the GEL is an aggravation of the conflict situation with Russia and the reduction of the number of tourists in the country.
“There is not the measure that will immediately compensate for the loss we have suffered… The worsened situation scared off investors and the number of investors who invested in foreign currency in Georgia has been declined,” Kobulia said.
He added there is a risk that Georgia will lose more than 1.5 million high solvent tourists from Russia.
Opposition parties claim the ruling Georgian Dream (GD) party is to be blamed for the current economic situation.
European Georgia MP, Zurab Chiaberashvili believes that in order to stabilize the situation, it is necessary to abolish some “nonsense regulations” and lower taxes.
“The situation can only be changed when the GD is replaced through the elections. I do not expect they will make and right steps,” he noted, adding the government should resign and new forces should be formed in order to “avoid the upcoming panic.”
The ban on direct flights with Georgia, imposed by the Russian President Vladimir Putin on June 25, took effect on July 8.