Gov’t forecast no risk of hyper-inflation

The Government of Georgia believes there is no risk of hyperinflation and the GEL exchange rate fluctuations were common.

National Bank of Georgia said in the past 12 months the Georgian currency value against the US dollar decreased by 5%.

Currently, the steadily decreasing value of the Georgian Lari is the lowest it has been against the US Dollar since 2011. As of January 18, 1 GEL is valued at 1.7678 USD.

The Vice Premier and the Ministry of Economy and Sustainable Development of Georgia Giorgi Kvirikashvili said on Rustavi 2 TV that there were no objective reasons for hype-rinflation and the currency would continue to fluctuate as normal.

The inflation target of 2014 is 6%, according to National Bank of Georgia (NBG).

"National Bank of Georgia has international reserves of 2.8 million GEL and that gives us promise that the bank will use the reserves to control the exchange rate, Kvirikashvili said.

However, on January 10, NBG President Giorgi Kadagidze said the bank may tighten cash conditions to address the inflation risks.

Kvirikashvili believed that the volume of the foreign direct investment would increase in Georgia in spring and as a result the Lari exchange rate will be strengthened.

In addition, Georgia had a floating exchange rate, which meant that the currency was set by the foreign-exchange market through supply and demand, in relation to other currencies.

The Economy Ministry only worried about people whose income was in GEL but had financial obligations in the US dollar.