Georgia’s PM: Businessmen and Gov’t must work together to strengthen economy
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The Prime Minister of Georgia is encouraging the business sector to work together with the Government and support local production in order to enjoy a better economy and a stronger national currency.
Despite an increase in tourist numbers and the fact the country hosted several major sporting and business forums recently, which saw an inflow of US dollars into the country, Georgia’s national currency still continued to devaluate.
The National Bank of Georgia (NBG) said the external shock effect on the Lari exchange rate was now over, which encouraged experts to assume the Lari would strengthen this summer however the Lari has continued to fall against the greenback.
Since August 20, 1 USD equalled 2.3245 GEL. Before this the exchange rate was 2.3214 GEL for every US dollar, meaning the GEL had slightly depreciated.
Now, some experts believed the Lari will depreciate further in autumn when tourist numbers drop.
However Prime Minister Irakli Garibashvili claimed "people created false expectations” and said the crisis period had already passed.
I would ask businessmen and citizens not to be confused because of false expectations [about the Lari depreciation]. Yesterday I talked to experts and analysts from the NBG and the Finance Ministry, who said Georgia had already passed the crisis period,” Garibashvili said.
He believed one reason why the country’s national currency continued to depreciate was because local businessmen had decided to save US dollars instead of spending it. Garibashvili believed this hampered the strengthening of Georgia’s national currency.
Looking ahead Garibashvili said the Lari will appreciate as businessmen "will have to sell US dollars and buy the Lari today or tomorrow”.
Meanwhile speaking yesterday at the opening of a new fruit processing plant in Adjara, Garibashvili said it was unfortunate that the business sector was "very passive” despite the fact the Government had created favourable working conditions.
Doing business is absolutely free today; we have free media, court and all conditions created for Georgian entrepreneurs to run their business without any obstacles,” he said.
Our goal is to produce Georgian products and compete with imported and low quality products. The Government is ready to support the business society who needs more encouragement,” Garibashvili added.
While selling US dollars and buying Lari would contribute to strengthening the local economy, Garibashvili noted the business community could still save some financial resources in US dollars while still supporting development of local production.
This way we would strengthen our country. This is not strengthening of the Government but this is support for our population. The Government and the private sector should stand together. Only this way is it possible to reach success and allow the Georgian state to become strong.”
The National Bank of Georgia has increased its refinancing rate following advice from its Monetary Policy Committee (MPC).
Georgia’s national currency, the Lari, is beginning to stabilise since it began dropping in value against the US dollar about seven months ago. Meanwhile in the past three days the Lari has strengthened slightly.
Georgia’s economy is expected to decelerate to 2.3 percent in 2015 and 2.6 percent in 2016, reflecting mainly a deteriorating external environment, with recession in Russia and sharp slowdown of regional trading partners.
The National Bank of Georgia and local businessmen are teaming up to strategize ways to stop the national currency depreciating further against the US Dollar.
"We do not expect further fluctuation of the Lari,” says the Vice President of the National Bank of Georgia (NBG).
The country’s Gross Domestic Product (GDP) experienced an average real growth of 3 percent year-on-year (y/y) in July 2015, says the country’s National Statistics Office.
One of the world’s largest credit rating agencies has released its theory about why Georgia’s national currency is continuing to drop in value.
"The crisis period is over and we expect the national currency will appreciate in the mid-term period,” claims Georgia’s Prime Minister Irakli Garibashvili.