IMF official: Georgia’s macroeconomic foundation is solid
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An International Monetary Fund (IMF) official believes the recent fluctuations of the Georgian Lari will not shake the country’s macroeconomic foundation.
Although the Georgian currency continued to depreciate in value against the US Dollar this week, IMF Resident Representative in Georgia Azim Sadikov said Georgia’s macroeconomic foundation and "main indicators” were "solid” and "strong”.
"Fluctuations have been observed recently in the exchange rate but these fluctuations will not shake the macroeconomic foundation of Georgia,” Sadikov said.
"The GEL is a floating currency. The aim of the National Bank [of Georgia] is not fixation of the exchange rate. The National Bank's goal is to stabilize prices."
The IMF representative said the Lari had dropped in value extremely quickly, however it should also be noted that it had been stable for the last 12 years.
Sadikov believed there were several factors behind the Lari depreciation.
"The USD has got stronger against many other currencies,” he said.
"Also, we don’t yet have data about November trade but we presume exports has dropped and consequently, the inflow of foreign currency has reduced. This caused a misbalance between the GEL and the USD.”
He also said the main problem in Georgia was trade deficit, meaning "we consume more than we export”.
"We need structural changes that will strengthen the economy, increase our potential and we will be able to export more. We need growth that will strengthen our manufacturing potential,” Sadikov said.
Meanwhile, Georgia’s Finance Minister Nodar Khaduri assumed the Georgian Lari would become stable next week.
"I hope that the exchange rate will not increase anymore,” he said.
"It will become stable during the next week and it is also expected to drop.”
The National Bank of Georgia (BoG) believes there is no risk of higher inflation than what has been forecast as the Georgian Lari continues to depreciate in value against the US Dollar. It is currently the lowest it has been in four years.
The Georgian Lari is continuing to depreciate in value against the US Dollar and is currently the lowest it has been in four years.
The suddenly decreasing value of the Georgian Lari is the lowest it has been against the US Dollar since 2010.
Chief Economist for the Europe and Central Asia region of the World Bank Hans Timmer believes the recent tumble of the value of the Georgian Lari has nothing to do with the weakness of the Georgian economy.
Georgia’s national currency faces no fear in value, and on the contrary in the coming days it will become even stronger, said Georgia’s Prime Minister said today after the Lari fell to its lowest level in early December 5 since May 2004.
This year’s budget will be 100 percent fulfilled and all funds will be spent appropriately, said Georgia’s Finance Minister Nodar Khaduri at today’s Government meeting.
The International Monetary Fund (IMF) approved $58.1 million USD assistance package to Georgia with bringing total disbursements.
Head of the National Bank of Georgia (NBG) Giorgi Kadagidze has been named as the Central Bank Governor of 2014 for Europe by the prestigious Banker Magazine.