Georgian Ministers Sure GEL Will Regain Value
Following the sharp depreciation of the Georgian national currency GEL, the exchange rate of which has reached almost GEL 3 per $1, the ministers have stated their assurance that the situation will stabilize soon, adding there is no ground for panic.
Natia Turnava, Minister of Economy and Sustainable Development, says there is no organic, in-depth reason for economic development that would have a negative impact on the GEL rate in the first six months of the year.
She states that today everything indicates that the problems with regard to the GEL are mainly caused by negative news and certain speculative expectations and statements.
“On the one hand, we have positive economic growth, improved trade balance, inflation within the plan. On the other hand, we have problems with the GEL course - we clearly see factors such as negative news and speculative statements. Some people do it intentionally, with the aim of causing panic, some unintentionally. These factors mainly affect the rate of the GEL,” Turnava said.
The Minister added that negative expectations regarding the GEL rate are artificial, lacking in depth and organic reasons. Therefore, she said she expects the exchange rate to stabilize soon.
“The sooner the information background is normalized, the faster we will normalize this process. I repeat again - the economic parameters give us good reason to assume that in the near future the GEL rate will stabilize. We should all contribute to this,” she added.
The Minister of Finance, Ivane Machavariani, also confirmed the national currency will soon regain value, noting the GEL is unnaturally, excessively depreciated and this is linked to recent developments in the country.
“At the moment, we have 10% depreciation with our trading partners and we can say with certainty that this trend will change and the GEL will go down. I say so with full responsibility,” he said.
Machavariani claims the main reason for the GEL losing its value is the flight ban imposed by Russia, which resulted in a reduced number of tourists, and negative expectations.
The Minister added that Georgia has quite a healthy economy in the region and if citizens seek to be more pragmatic, political instability will affect the economy less.
Vice Prime Minister and Minister of Regional Development and Infrastructure Maia Tskitishvili says political stability is necessary for economic stability.
Tskitishvili noted that the June 20-21 events, and calls for the opposition to storm parliament, when the Russian MPs were there, worsened the situation and resulted in Russian sanctions on Georgian tourism, which had a negative impact on the economy as it lost around 1.5 million tourists.
“The state works on a daily basis to grow and strengthen our economy…But for that we also need political stability,” she said.
Meanwhile, the Minister of Agriculture of Georgia, Levan Davitashvili, says the National Bank of Georgia has the right monetary policy and is making the right decisions.
Davitashvili noted that the GEL rate was largely related to the feeling of instability caused by the recent events, claiming that in reality, the Georgian economy is healthy.
“The National Statistics Office released real economic data, according to which in the first six months of the year, we had a 4.9% real economic growth and 5% economic growth in June, which confirms that the economy is healthy,” he said.
The Minister blames the opposition parties for the instability of the national currency, adding with their actions and statements they caused the fluctuation of the GEL. The data released by the National Bank of Georgia reads $1 costs GEL 2.9718 while €1 is GEL 3.3127 and £1 equals GEL 3.6170.
On Thursday, the NBG decided to interfere in order to stop the GEL devaluation by selling $40 million on auction from its reserves.
The NBG said if necessary, they will continue intervention in the following days and if there are risks of inflation, they will tighten the monetary policy too.
By Thea Morrison
Image source: Imedi News