Georgian PM: ‘Recent developments brought dissonance to economy, but macroeconomic factors are quite healthy’

PM Bakhtadze said that Georgia will deal with the short-term and temporary fluctuations of the lari. Photo: PM's press office., 28 Jun 2019 - 12:08, Tbilisi,Georgia

Recent developments have brought dissonance to the Georgian economy, however the macroeconomic factors are quite healthy, said Georgian Prime Minister Mamuka Bakhtadze while commenting on the devaluation of the Georgian national currency, the lari, today. 

Bakhtadze was referring to Russian President Vladimir Putin’s ban on flights to Georgia this summer. Bakhtadze said that Georgia will deal with the short-term and temporary fluctuations of the lari.

All of this will be pacified. The country is in [the process of] stable development. At the same time, each fundamental factor in our economy, which determines the sustainability of the economy, is at quite a good level… we have to work more actively to solve the problems that we face in the short-term period and to implement our government programme in a more effective way”, said Bakhtadze.

Russian president has ordered a ban on flights to Georgia as part of Russian state reaction to protest in Tbilisi following a Duma MP's appearance in the Tbilisi parliament. Photo: Nino Alavidze/

Bakhtadze also promised to protect the economic interest of each citizen who might be affected by the drop in tourists from Russia.

In such situations the most important recommendations come from the private sector, so from people who are really concerned and also have specific ideas on how to solve this problem. We have daily active communication with the private sector in order to agree on the actions that will help us avoid bad scenarios”, said Bakhtadze.

The National Bank of Georgia (NBG) also announced yesterday that the anticipated drop in tourists from Russia “is reflected on the currency market”.

The lari has depreciated in value against the US dollar and the euro in recent days by about 5 tetri, with 1 USD costing 2.8791 GEL (2.8470 as of yesterday), while 1 EUR costs 3.2758 GEL (3.2356 as of yesterday) today.

The lari has depreciated in value against the US dollar and the euro in recent days by about 5 tetri. Photo: Nino Alavidze/

Economic and trade diversification, the success of implemented reforms, its macroeconomic resilience, low public debt level and strong banking sector are the factors that insure economic resilience in the face of upcoming Russian sanctions on Georgia’s tourism and possibly on wine industry, says the Galt & Taggart, investment banking and investment management services company in Georgia.

Dealing with Russian sanctions is not a new challenge for Georgia. The 2006 Russian embargo forced Georgia to redirect its focus from Russian market, which expanded export destinations and improved quality of Georgian products. This also deepened economic ties with the rest of the world, with EU-Georgia free trade agreement signed in 2014, followed by free trade deals with China and other countries. We believe that upcoming Russian sanctions will further intensify Georgia’s economic diversification, use potential of new large markets – EU and China, and enhance its institutions”, said the Galt & Taggart.

Galt & Taggart states that recent Russian sanctions are expected to weigh on the Georgian economy, but unlike the 2006 Russian embargo, “the country is better placed to deal with negative shocks”.