Baku, Azerbaijan, August 3
By Tamilla Mammadova – Trend:
In the first half of 2019, external sector performance of Georgia continued to improve, National bank of Georgia told Trend.
“In 2018, the current account deficit was 7.7 percent of GDP. According to estimates, despite the recent external shock, the deficit is expected to improve considerably in 2019”, said the bank.
As reported, there has been some turbulence on foreign exchange market of Georgia lately. The sanctions of Russia in the tourism sector had negative impact on the economic expectations. Despite the positive macroeconomic dynamics in the internal and external sectors, lari depreciated considerably and it reached such a level that it could threaten price stability.
According to the Bank, the nominal effective exchange rate seemed to be undervalued more than the size of the current shock would suggest. Therefore, the National Bank of Georgia considered it necessary to use the instruments at its disposal to avoid such risks. Within these measures, the NBG sold $33 million through the FX auction (auctioned amount was $40 million) on August 1, 2019.
“The NBG will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal in order to ensure the price stability. If pressure on inflation from exchange rate persists, it will consider the possibility of monetary policy tightening”, said the bank.