IMF official: Georgia’s macroeconomic foundation is solid

As of January 31, 1 GEL is valued at 1.7819 USD. Photo by N.Alavidze, 07 Dec 2014 - 19:55, Tbilisi,Georgia

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.”