Lari Continues Slide – Experts Urge the Government for an Immediate Response

Despite projections of the members of the government,  the national currency  continues depreciation. Members of the Cabinet in March suggested that along with the activation of the tourist season, the lari would gain, however, expectations have not justified themselves.

In March, the Economy Minister George Kvirikashvili expected  the strengthening of the national currency in the summer due to the inflow of foreign currency. In this context, the Youth Olympic Festival Tbilisi 2015 and UEFA- Super Cup game were considered one of the most important factors. Youth Olympic Festival ended a week ago, today value of one lari against the dollar is 2.30.

George Kepuladze, Chairman of  the NGO “Society and the banks”, says in a  conversation with  CBW that in his opinion, the government let things slide  hoping that the summer factor will strengthen the national currency. In Kepuladze’s words,  the government hoped for  tourist flow  which is typical for  this season. According to him, one of the reasons of the  depreciation is that the privatization process is going very slowly and quietly, at the same time nothing is heard  about  new investors. Kepuladze adds that work on major projects such as KhudoniHPP and Anaklia Port projects are carried out at  a very slow pace.

In his words, the autumn is  particularly dangerous period when the flow of tourists declines , so Kepuladze  calls on the government to work hard on  attraction of investment and privatization. He believes  the government must not allow budget deficits. According to the head of the NGO, the lari’s further depreciation in the summer created even more pessimistic expectations among the citizens, which is also bad for the economy.

An expert Emzar Jgerenaia urges the  government to quickly react and intensify privatization, otherwise, he  forecasts the lari’s  further devaluation in September. As for the influx during the Olympics, Jgerenaia says that it will affect the exchange rate by  August 10 and the national currency will  strengthen. As for a further depreciation of the lari , in Jgerenaia’s words, several factors have led to this.

“June was rainy and  cold. The tourists didn’t visit  the coastal cities.  In June export performance was  also very difficult. Everything reflected in the exchange rate. The situation was aggravated by   Greek developments when the banks did not allow the population to transfer money abroad. Grown tourism in August plays a big role, it’s a pretty good season both in  coastal and mountain regions. From August privatization indicators and the flow of currencies are expected to increase, or the exchange rate will fall even more in September. To avoid this, it’s immediately required to find investment and intensify  a privatization process,” Emzar Jgerenaia believes.