Gov’t discusses ways to maintain financial stability in Georgia

The Government of Georgia is pledging to do everything it can to ensure the country enjoys financial stability.

The Government’s economic team has already begun to take action in a number of directions, including increasing the number of visitors to Georgia, encouraging export and supporting the construction sector.

These were three areas the economic team earlier identified as areas that needed to be supported so the country can reach its goal of ensuring financial stability and improving the economy.

Georgian officials said measures had been put in place to help the country maintain financial stability and to balance the rate of the national currency, the Lari.

It is already known that the export incentive institute – one of the measures recently implemented - will start its activities in April 2015, under the guidance of state-owned shareholding company, Partnership Fund.

Today the Government’s economic team introduced its action plan and current economic activities to Prime Minister Irakli Garibashvili, including information about increasing Georgia’s refinancing rate.

The National Bank of Georgia (NBG) increased the refinancing rate by 50 basis points to 4.5 percent yesterday. Georgia’s Economic Minister Giorgi Kvikirashvili and Finance Minister Nodar Khaduri believed the changes in the refinancing rate had already begun to stabilise the exchange market.

The National Bank of Georgia has an exclusive right to implement monetary policy. The bank has operational information about the exchange market and is able to make decisions based on this information. The fact that changes have been made to the refinancing rate is an adequate step for stabilising the exchange market. We can already see that this effort is affecting the exchange rate,” Kvirikashvili said.

Since this morning the Lari has started to strengthen and the economic team believed this was a result of tightening the monetary policy. Today’s new official exchange rate established by NBG now showed $1 USD cost 2.0248 GEL.

Previously, the exchange rate was 2.0421 GEL and in one day it shifted 0.0173 GEL.

Khaduri said the Government’s economic team coordinated with NBG and to implement fiscal and monetary policy in unison.

"Together with the National Bank of Georgia we do our best to maintain financial stability in the country and to avoid inflation. Also, we work hard to ensure the economic growth rate,” he said.

Despite the fact that Georgia’s economic growth rate is the highest in the region we still should have more ambitions,” Khaduri said.

Prime Minister Garibashvili asked the economic team to take into account the current economic situation in the region and around the world and to plan the year accordingly.

Garibashvili also instructed the economic team members to have tighter communication with the general population.

"It is useful to explain to society the tendencies that will appear in the near future. We should provide them with all necessary information in advance.”

"At the same time we should not forget about the reality that we live in. I mean the challenges that the world and the region face. These challenges affect our economy as well and we should plan the current year based on all possible circumstances,” Garibashvili said.