Devaluation of the GEL: Evaluations & Predictions

Over the last few days, the devaluation of the Georgian national currency, Lari, has become a topic of ever-growing interest and anxiety. On Tuesday evening, Prime Minister Mamuka Bakhtadze commented on the subject, telling the press that “any analysis shows that the fundamental economical factors are strong today, meaning the GEL depreciation is too high”. He named the recent events in Georgia, the unexpected rise and then fall of tourism in the country, as reasons for the inability to mobilize predicted revenue from the sector, resulting in the GEL depreciation.

On Tuesday, the President of the National Bank of Georgia, Koba Gvenetadze, noted the Lari’s falling value and the fact it was raising concern in society. He stated the devaluation of the national currency is caused by external shocks and the reduction in tourist flow into the country.

It might be interesting to look at what other officials or members of oppositional parties have to say about the devaluation of the national currency. With experts’ dramatic predictions to hand claiming the price of one dollar could hit three and a half GEL, some businessmen are suggesting that Gvenetadze should resign and the government’s economic team be questioned.

These businessmen say that the ruling government is guilty of prolonging a harmful economic policy and is intentionally damaging the investment environment by attacking the founders of TBC Bank.

The Chairman of the Georgian Distributors Business Association, Iva Chkonia, said, “They should come out and explain in detail what is happening in the country. If the country’s economic team is the one to blame here, the Head of the National Bank should publicly admit that they are not fulfilling their responsibility and are working inadequately. Blaming political events for the economic detour of our country, is absurd. The current situation is very bad for business and the businessmen who create the economic atmosphere for our state. They will have an extraordinarily hard time continuing to operate with the value of today’s currency. If there is no existing action plan, the President of the National Bank must resign,” he said.

Doctor in the Economic Sciences and Vice President of the Center of International Research and Forecasting, Nika Shengelia, says the government’s economic team should be renewed and the National Bank should be reformed.

Zurab Japaridze from the Girchi Political Party has published a statement on his Facebook page evaluating the reasons behind the GEL devaluation. In a long post published on Wednesday, Japaridze names the government’s chosen political course, their way of dealing with social problems and the mentality they have been giving stimulus to as the long term reasons for the depreciation of the national currency.

Zurab Chiaberashvili, one of the leaders of the European Georgia party, commented on the subject on Wednesday, saying that “The devaluation of the GEL shows the difficult economic situation, which has worsened due to the unadvised economic policy of the Georgian Dream party.” According to Chiaberashvili, even if the ruling party takes the right economic steps, reaching the short-term stability of the GEL is impossible as people have little to no confidence left in Georgian Dream. “The medium term stability of the GEL will only be possible after the current government is replaced through election,” he stated.

By Nini Dakhundaridze