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Devaluation of national currency in Georgia to accelerate - TBC Group

Business Materials 23 December 2020 17:55 (UTC +04:00)
Devaluation of national currency in Georgia to accelerate - TBC Group

BAKU, Azerbaijan, Dec.23

By Tamilla Mammadova – Trend:

Georgia’s inflation rate will exceed 6 percent in the first half of 2021, that will accelerate the devaluation of the national currency, said Otar Nadaraya, chief economist at TBC-Group, Trend reports via Georgian media.

According to Nadaraya, early 2020 was good for the national currency, but the COVID-19 pandemic negatively affected its rate, mainly due to external factors.

“The devaluation peak was caused by negative expectations in Georgia due to the pandemic and the global shutdown of the economy. External factors are vital - as soon as it was reported about a vaccine against coronavirus, the national currency began to gain its value. The lari’s current devaluation is very painful, but given external factors, everything could have been much worse,” Nadaraya explains.

“In the second half of 2021 when the mass vaccination begins and the coronavirus pandemic weakens, the tourism sector will start recovering that will definitely improve the overall situation in the country. The stabilization will attract funds allocated as international financial assistance - a bulk of these has not yet been received, " the economist said.

He added that part of the external debt will be spent on replenishing the central bank’s currency reserves that will be sufficient to maintain the stability of the lari’s exchange rate.

“The forecasts that inflation will grow and exceed 6 percent unfortunately provide grounds that the devaluation of the national currency will accelerate and if necessarily, the National Bank will have to use the instruments, including foreign exchange interventions and an increase in the refinancing rate,” Nadaraya stressed.

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