Georgian National currency GEL (Lari) has gained its value by 4 tetri, after the National Bank of Georgia (NBG) opened Foreign exchange reserves.
Lari starts to strengthen
By Tea Mariamidze
Thursday, September 24
The NBG has taken 40 million Gel from the reserves and put it on sale, although the demand was only on 27 million USD.
The new official rate of the lari-to-dollar is 2.40, which was 2.44 the previous day. The GEL also strengthened against the Euro. One Euro will now cost 2.6880 GEL instead of 2.7632 .
Opening of the foreign reserves caused different assessments among the MPs, opposition members and economic analysts.
Some of them believe that the usage of the reserves, in order to stop the continuing currency devaluation, is an effective but short-term step.
Others call on the government to elaborate a long-term plan for solving the problem or change the monetary policy.
Zurab Japaridze, the founder of the New Political Centre, a former opposition United National Movement (UNM) member, says that the situation will get worse in the future.
According to him, the government is misspending funds, which might cause a credit crisis.
“The government is spending too much money. They have created such an image that neither the people nor any investor trust them; the expectation that the situation will get better is an illusion; the government should stop misspending and cut expenses,” said Japaridze.
The head of Economic Centre and economic analyst, Roman Gotsiridze, says that the main problem in the country is inflation.
“From two main problems –collapse of the economy and inflation, the latter is more dangerous. It was caused by a number of mistakes, made by the government. They should stop planning populist budget,” the expert said.
Giorgi Kadagidze, the Head of the NBG said that further devaluation of Gel is not expected.
“In case the situation gets worse, we will tighten monetary policy and the government on its own will tighten fiscal policy, which means the reduction of the budget,” he said.
Minister of Economy and Sustainable Development, Dimitri Kumsishvili believes that the exchange rate will stabilize. He says that there are no doubts about that.
The Minister also noted that the parameters of 2016 year budget are already known to him.
“Economic growth has increased by 3% but the inflation has reached 4%. I only can name these two parameters, the other ones should be named by the Finance Minister,” stated Kumsishvili.