Acting National Bank Governor presents monetary, exchange rate policies for 2024-2026

Natia Turnava, the Acting Governor of the National Bank of Georgia, on Wednesday presented draft documents for the main directions of its monetary and exchange rate policies for 2024-2026 at the Parliament.

The document provides the inflation target, the main monetary policy instruments that are used by the central bank, and overviews the macroeconomic milieu and risks, with the Governor telling MPs the policy would ensure price stability in the medium term, which would in turn increase stability of the national economy against “potential shocks” and promote “stable and long-term economic growth”.

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

She also linked the low domestic inflation - which in November decreased by 0.2 percent compared to the previous month, with the annual inflation rate at 0.1 percent - with “lower inflationary expectations” amid a “tight” monetary policy. 

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.

Turnava also noted the Bank’s regulations under international sanctions imposed on Russia for its invasion of Ukraine, saying “none of our regulations, including the regulation related to sanctions, is dedicated to any specific name”, in reference to Otar Partskhaladze, the former Prosecutor General who was sanctioned by the United States in September for alleged connections with Russian intelligence.

She added the regulations were aimed at ensuring that the constitution and national legislation were “protected”, and that international obligations were “effectively fulfilled” by the banking system, adding the National Bank and domestic banking system were “strictly” complying with international obligations.