National Bank tightens monetary policy to avoid price rises

The National Bank of Georgia is preparing tighten the country's monetary policy in a bid to control the economy in light of the decreasing value of the national currency.

The Bank’s president Giorgi Kadagidze said the deprecation of the Lari was approaching the point where a price increase on products was becoming a real threat.

Our citizens see a big loss because of the Lari depreciation and especially those citizens who have loans in US Dollars and income in Lari. We will use all mechanisms to tighten the monetary policy from next week. We will interfere in this process in a way to ensure the country reaches macroeconomic stability,” Kadagidze said.

Monetary policy is one way the government can attempt to control the economy. If the money supply grows too fast, the rate of inflation will increase; if the growth of the money supply is slowed too much, then economic growth may also slow.

After the Bank held consultations with the Government, it was decided that the fiscal part (budgetary part) will be balanced, or the revenues part of the budget will exceed its costs.

"Taking into account the recent challenges that our economy faces we should not expect a five percent growth in economy in 2015, but less. Accordingly, fiscal and macroeconomic indicators should be replanned because the economic policy should adequately respond to the challenges that the country faces,” he added.

Meanwhile next week experts will also calculate how the trade deficit had decreased in Georgia.

The National Bank of Georgia will publically release the statistical information about January's export-import and inflation rates.