National Bank Acting Governor: foreign exchange reserves at “historic high”, within limits

Natia Turnava, the Acting Governor of the National Bank of Georgia, on Wednesday said the country’s foreign exchange reserves were at a “historic high” and within the limits of an “adequate level”, in comments at the session of the Finance and Budget Committee of the Parliament.

Turnava told the meeting the volume of international currency reserves had equalled $5.1 billion by October.

Keeping foreign exchange reserves at an adequate level helps minimise the country's sovereign risk, which is a positive factor for investments and macroeconomic stability”, she said.

The Acting Governor said the Bank was replenishing international currency reserves “more actively” during 2023, in order to moderate the “excess fluctuations” in the background of the recently increased foreign currency inflows and maintain the international currency reserves within the adequate level.

As of October 2023, taking all interventions into account, international reserves were at $1.292 billion”, she said.

Turnava presented the draft of the main directions of the monetary and credit and currency policy for the next three years, which she said would ensure price stability in the medium term. 

She also mentioned the “low” inflation, which in November decreased by 0.2 percent compared to the previous month, with the annual inflation rate at 0.1 percent, adding the outcome was the result of “lower inflationary expectations” amid a “tight” monetary policy. 

• Certain food, household equipment, health costs down, inflation at 0.1% across Georgia in November

[Over the past] year, the strengthening of the [national currency] exchange rate, together with the gradual reduction of the effects of external shocks, significantly contributed to the decrease of imported inflation and led to the decrease of the total inflation”, the official said.

The Acting Governor also noted the Government's policy, aimed at fiscal consolidation and measures to strengthen competition in individual commodity markets, had made a “positive” contribution to the process of reducing inflation. 

Following the current macroeconomic forecast of the National Bank, inflation will remain below the target rate of three percent until the end of 2023, while in the medium term it will stabilise around the three percent target.