National Bank of Georgia takes necessary steps due to instability in financial market

National Bank of Georgia takes necessary steps due to instability in financial market

BAKU, Azerbaijan, March 13

By Tamilla Mammadova – Trend:

The National Bank of Georgia is ready to take all necessary measures due to instability in the financial market caused by coronavirus, Trend reports with reference to the statement of the bank.

The statement said that the devaluation of the lari in recent days is primarily due to the sharp decline in the number of tourists caused by the coronavirus.

The next factor influencing the devaluation of the lari is a reduction in exports to countries where purchasing power has declined due to falling oil prices and a reduction in remittances from abroad, said the bank.

“It also creates negative expectations in the foreign exchange market, and a similar situation is developing in all countries of the region. At the same time, there are factors in favor of the lari - due to the termination of flights with a number of countries, the leakage of foreign currency from Georgian tourists visiting other countries wasdecreased, as well as the import of goods related to tourist services was reduced. In addition, the dependence of the money transfer market on Russia has significantly decreased, which also favorably affects the lari rate,” the bank stressed.

The National Bank noted that its main task is to control inflation. At present, according to the bank, two opposite processes are observed: the devaluation of the lari promotes inflation, and the reduction in demand, on the contrary, contributes to its decrease.

“Ultimately, the actions of the National Bank depend on which of these two trends will prevail. We are closely monitoring the development of events, and are ready to take all necessary measures,” the statement said.

Coronavirus outbreak has particularly affected the tourism sector in Georgia. According to official statistics, the tourism sector of Georgia in February this year suffered losses of 30 million lari ($10.5 million) due to the decrease in the number of visits by foreigners.

Against the backdrop of the outbreak of the coronavirus, as well as the oil crisis in the world, the national currency of Georgia began to fall rapidly.

As of today, Georgia has 25 confirmed cases of coronavirus.

Amid the coronavirus spread, Georgia has suspended direct flights with China, Iran and Italy, which are currently the largest centers of the outbreak.

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Follow the author on Twitter: @Mila61979356

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