Georgia’s national currency has depreciated even further. 1 US dollar now costs 2.19 GEL. The National Bank of Georgia has set a new exchange rate. According to the new rate, one dollar will cost 2.19 GEL from February 24.
Lari continues to plummet
By Tea Mariamidze
Wednesday, February 25
“It can be said without much hesitation now that there is an economic crisis in the country,” said Economist, and former head of the National Bank of Georgia Roman Gotsiridze.
“This is neither the first nor the last crisis… we can defeat it, but the government should not repeat the same mistakes that led to the crisis in the first place,” he says.
The analyst claims that a political decision to increase prices on electricity, gas or some other products will have a temporary effect.
“The government must stop with its demagogy and unfounded promises concerning the subsidizing of medicines and other products. We have no such resources. If the government takes such steps, we will face an even worse economic situation. They must reduce administrative expenses, and reduce staff and salaries of state officials,” the analyst claims.
The government recognized a couple of days ago that the situation with regard to the Lari was not favorable and announced a “tightening of belts” policy, meaning a decrease in administrative expenses without lay-offs or salary reductions.
“There are lots of other administration expenses that can be cut,” Finance Minister Nodar Khaduri stated, who is obliged to reveal a plan for the reductions in the next two-weeks.
“We are doing our best with the National Bank of Georgia to improve the current situation,” he says.
Some analysts speculate that the current strained situation in the country’s political-economic fields might lead to snap elections.
The Georgian Dream plans to fill its ranks with new faces. However, Georgian Dream members claim that early elections are not on the agenda and the parliamentary elections will take place in 2016 as scheduled.
“Nothing is excluded in Georgian politics, but snap-elections are not expected. Regarding the new faces, I believe that they will benefit our team and the country,” majority MP Eka Beselia said.
The opposition claims that the negative impact on the Georgian economy is because of the government’s poor policy choices and various unreasonable restrictions for tourists and businesses.