The Georgian government recognizes that the situation with regard to the national currency has deteriorated and is ready to “tighten belts.”
Government ‘tightens belts’ in response to lari troubles
By Gvantsa Gabekhadze
Monday, February 23
PM Irakli Garibashvili said the government would have to reduce administration costs and also to revise its economic growth forecast that should have reached 5% growth in 2015.
"There is a difficult economic situation in the regions” Garibashvili said.
"There is a hard situation in Ukraine. There is a crisis in Europe in general. Accordingly, Georgia with its small economy is tied to this global economy. This, of course, has had a negative impact on our economy.”
The Prime Minister stresses that it is mainly foreign factors that have caused the Lari’s devaluation,
(1 USD now costs 2.17 GEL.
The Prime Minister states that the government is working with the National Bank of Georgia to find a solution to the current situation.
The opposition accuses the government having a poor economic policy that has led the country to an unprecedented downfall.
The United National Movement claims that the government had no plan and staff to run the economic policy adequately.
They also blame the government in setting various restrictions, visa regulations among them, which hindered or suspended the inflow of foreign investments and tourists into the country.
Former head of the National Bank Roman Gotsiridze claims that the National Bank is taking the necessary steps to change the situation, while the government has been trying to shift responsibility for the lari’s troubles to external factors.
“The government should re-check the current restrictions concerning visas or the purchase of agricultural lands, as well as take genuine steps in attracting foreign investment and reduce the indicator for the economic growth in 2015,” Gotsiridze said.
A week ago the National Bank announced a restricted monetary policy in response to the recent challenges in terms of the national currency.
The head of the National Bank Giorgi Kadagidze stressed that the domestic situation was also one of the key causes of the national currency’s devaluation.
Since November of 2014 has the Lari lost 24.1% of its value against the U.S. dollar and 11.9 % against the euro.
Georgian exports have declined by 30% year-on-year. The government has attributed the failure mainly to decreasing exports to Russia and Ukraine.
Remittances also decreased, by at least by 20% compared to the same period of last year, resulting from decreased transfers from Russia.