Ivanishvili urges NBG to “take adequate steps” to stabilise Lari

Georgia’s former Prime Minister Bidzina Ivanishvili is blaming the National Bank of Georgia for the current national currency crisis.

He claimed the currency crisis in Georgia was created because of (NBG) president Giorgi Kadagidze’s "inaction” and "wrong actions”.

In his special statement released today, Ivanishvili said: "It was in NBG’s competence to manage the situation correctly. However we saw the contrary – the president of NBG, [who was] appointed by [former ruling party] United National Movement brought the national currency up to the crisis.”

While Georgia’s former Prime Minister lay most of the blame on Kadagidze, he acknowledged the Lari depreciation against the US dollar was also influenced by foreign factors. He mentioned almost all global currencies, including the Euro, had depreciated against the US dollar.

Another reason for the depreciation of the national currency was a result of the "complicated economic-political situation in the region”.

"As foreign factors affected the Lari fluctuation, the Government alleviated the negative impacts of foreign factors by implementing the fiscal policy and reduced the budget deficit by 300 million GEL in 2014. As we saw, at the end of last year and in January of 2015 the Lari exchange rate has become stable,” Ivanishvili said.

In his statement Ivanishvili said NBG could relinquish more of its reserves in order to save the national currency – as Armenia and Moldova had.

He noted Armenia had allocated 34 percent of its reserves and Moldova had allocated 30 percent of its reserves to save their national currencies. In comparison, NBG had relinquished only five percent, which amounted to $120 million USD.

Ivanishvili believed this exact action by Armenian and Moldovan banks had caused their national currencies to stabilise. NBG’s lack of action in this front had allowed the Lari to continue to fluctuate.

"According to the country’s Constitution the monetary policy is determined by NBG and it is responsible for stabilising the exchange rate,” Ivanishvili said.

"NBG owns the leverage to ensure the Lari stability in the country. Considering all the objective factors today, the Lari exchange rate should not exceed 2.0 USD to 1 Lari,” he said.

"I call on the NBG president to fulfill his Constitutional duty and take adequate steps,” Ivanishvili concluded.