(TBILISI) -- National Bank of Georgia (NBG) Vice President Archil Mestvirishvili, says that if the Georgian national currency the Georgian lari (GEL) continues to devaluate against the US dollar, the country’s monetary policy will need to be tightened in order to curb rapid inflation.
National Bank to Tighten Monetary Policy if Lari Continues Devaluation
By Tea Mariamidze
Thursday, November 16
Mestvirishvili partly blamed the depreciation of the lari on foreign importers, saying, “Those importers who used to buy currency in January-February started to buy it in August. Now they have become more active in this regard.”
He added that lari’s devaluation is always directly connected to false market and consumer expectations, which negatively affect the dollar-lari exchange rate.
On Wednesday the official dollar-lari exchange rate at the opening of the market stood at GEL 2.6989, down from GEL 2.6538 on Monday. The new Euro-lari exchange rate currently stands at GEL 3.1984, down from GEL 3.0904 on Monday.
The opposition says the government must be held responsible for the sharp depreciation of the lari.
The parliamentary opposition party European Georgia claims the ruling Georgian Dream has had an “irresponsible monetary policy” that affects ordinary citizens of the country.
“This is the result of an irresponsible and incompetent policy carried out by the Georgian Dream for years. Unfortunately, every citizen of our country must pay the price,” said European Georgia MP Levan Tarkhnishvili.
“The lives of our citizens are aggravated every day by increased prices. We do not expect the situation to get any better in the near future,” MP Zurab Melikishvili from the opposition United National Movement said on Wednesday.
Most regional analysts and economic experts have been deeply critical of the government’s lack of a coherent economic and monetary policy, saying they do not exclude the possibility that the prices of goods and utilities will significantly increase in the coming months.
“Lari continues to lose value and the worst thing is that the results will be negative for the population. We should expect that the companies of water or energy supply will increase tariffs,” economist Lasha Gotsiridze predicted.
Economist Irakli Kipiani says that the government and the NBG should make a joint statement regarding the economic situation in the country and present further plans and steps for improving the situation.