NBG President: “There is no reason for panic. The National Bank has used all the available leverage to reduce  inflationary pressures”

NBG President: “There is no reason for panic. The National Bank has used all the available leverage to reduce inflationary pressures”

access_time2019-10-04 14:37:22

“There is no reason for panic. The National Bank has used all the available leverage to reduce  inflationary pressures that will surely reduce inflation, ”Koba Gvenetadze, President of the National Bank of Georgia, says.

According to him, the excessive devaluation of the national currency is the main reason for  inflation.

“Russia’s travel ban raised negative expectations about a sharp reduction in foreign exchange revenues  in the country. Expectations play a very important role in shaping the exchange rate. The tourist flow from Russia decreased by 13% in July and 11% in August, the annual revenues remained at the same level and did not grow. However, the current level of devaluation does not correspond to economic indicators but still has  a serious inflationary pressure, for this reason the National Bank decided to use its levers to influence the situation, ” Koba Gvenetadze notes.



In particular, the refinancing rate was increased, currency interventions were carried out in the market, the required reserve for loans in foreign currency was cut from 30% to 25%.

“The banking sector now has an additional opportunity to issue loans in foreign currency and meet demand. Last year, we increased the requirement for compulsory reservation, and reduced the risks to financial stability due to a very high level of dollarization in the economy,” President of the National Bank  explains.

Gvenetadze believes that the use of the instruments should be rational and consistent with the risks facing by the country.

“External shocks can occur any time, but the main thing is to cope with them. They can’t be  forecasted, but can be  neutralized for a certain period. Now there is no reason for panic - we are actively working with the government, and I’m sure that the right macroeconomic approach will certainly bring corresponding results, ” President  of the National Bank says.


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