Lari Devaluation Leads to Higher Prices of Oil Products
The recent sharp devaluation of the Georgian national currency Lari (GEL) against the US Dollar has resulted in increased prices of all products in the country, including oil and gas products.
The depreciation notably accelerated after the October 21 local elections, and some experts and opposition parties have voiced accusations about an artificial retention of a more or less stable currency rate by the government during the pre-election and election period.
$1 equaled GEL 2.72 on November 20 in the official rate set by the National Bank of Georgia (NBG). On November 17 it was 2.70. On October 20, just a day before the municipal elections, the rate was 2.48.
While the prices on food and medication have already gone up, the price of petrol, gas and oil products rose by 10%. Experts do not exclude higher prices just before Christmas and New Year, like last winter when the GEL devaluation established the historical maximum – 2.78.
Last year, the official reason for the GEL devaluation was named “external shock:” economic problems in the neighboring countries and throughout the region, while this year, the representatives of the NBG and the government say the situation is caused by the false expectations of society.
President of the National Bank, Koba Gvenetadze, will go to Parliament on November 27 to provide MPs with the current economic situation and give explanations for the sharp depreciation of the GEL.
The opposition is getting questions ready for the meeting with Gvenetadze. They also claim that the government is not doing its best to improve the current economic situation in the country.
“We have fundamental problems in the country and the government is not doing anything to solve them,” opposition United National Movement member, Zurab Melikishvili stressed.
One of the leaders of the parliamentary minority, European Georgia, Giga Bokeria, says that the explanation of the government about the GEL depreciation is “nonsense.”
Bokeria believes that it is the government which should be held responsible for the poor economy of the country, and not the NBG president.
“We see that the country does is not moving forward. The economy has not developed and the prices are up. In terms of economy, we have stayed in the Post-Soviet swamp and we do not even have the trends to get out of it,” he stated.
Economist Giorgi Papava believes that the elections were the main factor for the GEL devaluation because the private sector thought it would be better to purchase Dollars beforehand, believing the rate would increase after the polls.
“This was the main reason. The additional factor was the expectations of society, with people believing the GEL always increases at the end of the year and acting accordingly,” the economist said.
Davit Matikashvili, MP of the Georgian Dream majority, has positive expectations. He says the NBG will do its best to improve the situation.
“The NBG President stated some time ago that if the GEL reaches the defined rate, the National Bank will intervene. I believe that the government will do its best to maintain stability in the country,” the MP said.
Thea Morrison