National Bank forecasts no risk of higher inflation

The National Bank of Georgia (NBG) believes there is no risk of higher inflation than what has already 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 forecast inflation is 5 percent. 

At a press conference today NBG president Giorgi Kadagidze said there were two reasons that gave his optimism that there was no risk of higher inflation in the country. These were the global decreasing cost of main commodities and unlike previous years, the money supply had not been increased. 

Kadagidze was confident the depreciation of the Georgian Lari was caused by "inside and outside factors”.  

• As of December 5, $1 USD was valued at 1.9527 GEL.
• Since November 18, the value of the Georgian currency against the US Dollar has dropped 10.6 percent.
• Latest data from state statistics office Geostat revealed Georgia’s annual inflation rate was 2.8 percent in November, down from 3.4 percent in October.

"Historically, Georgian Lari to US Dollar exchange rate has been trending lower in the past seven years and the sources of the inner currency inflows have been weakening. We believe this misbalance has already been eliminated and it has already reflected on the Lari exchange rate,” Kadagidze said.

"We are observing the situation of the past few days and it is clear that the process that is happening is mainly caused by the excessive behaviour of industry insiders, which is generally characteristic of the financial markets.”

Kadagidze called on market insiders not to make "unwary” decisions regarding converting money as they would always loose. "After the decline come rise,” he said.

Kadagidze pledged the NBG would do its best to "guarantee the financial and macroeconomic stability of the country".

"The aim of the National Bank was to preserve the stability of prices. There is no fear of financial and macroeconomic stability of the country," he said. 

Meanwhile, Prime Minister Irakli Garibashvili met the economic profile members of the cabinet of ministers and discussed the situation in the country.

"The Government of Georgia has been pursuing a consistent policy, therefore, there is no fear of worsening the financial stability and the Lari exchange rate in a long-term period,” the press office of the Prime Minister said in a statement.

Similarly, the value of the Georgian Lari steadily decreased in the same period of last year. At the time the Government said the slow increase of the economy and budget spend were the reasons behind the Lari fluctuation.