In a written statement on February 26, ex-PM Bidzina Ivanishvili said blaming government for depreciation of the Georgian currency lari (GEL) is groundless and accused the central bank and its president Giorgi Kadagidze’s “inaction and wrong actions” for, as he put it, “crisis.”

Ivanishvili also blamed the opposition United National Movement (UNM) for “causing a stir”, which, he said, also contributed to GEL fall.

He said that appreciation of U.S. dollar and “difficult economic-political situation in the region” is the main cause of depreciation of GEL.

He said that in the condition of GEL’s floating exchange rate, changes in its rate were a “healthy reaction to external economic circumstances.”

“In an attempt to ease affect of external factors, the Georgian government cut budget deficit in 2014 from 3.9% to 2.9%,” reads the statement, referring to this year’s budget, which sets deficit to no more than 3% of GDP.
 
“By the end of last year and in January of 2015 lari stabilized to a rate more or less relevant to factors caused by external circumstances,” Ivanishvili said.

GEL, which started depreciation from early November, gained a bit by the end of December, but again continued to depreciate starting from January.

Late on Thursday afternoon GEL strengthened 0.6% to 2.2494 per U.S. dollar.

Since early November, when GEL started depreciation, the Georgian currency lost 28.2% of its value against U.S. dollar and 15.8% against euro.

Ivanishvili said that developments of recent days – apparently referring to falling of GEL on February 24 sharper than in previous days, when it lost 3% against dollar, the largest single-day drop in almost a decade – obviously indicate on presence of “wrong expectations, speculative dealings and stir, which the United National Movement [opposition party] representatives and their ‘experts’ are eagerly attempting to cause.”

“They are pointing the finger at the government without any analysis and justification, but under the constitution country’s monetary policy is determined by the National Bank,” reads Ivanishvili’s statement.

“It was within the competence of the National Bank and its direct responsibility to manage the situation correctly in order to prevent incorrect development. But we have seen opposite of that, and the President of the National Bank Giorgi Kadagidze, who was appointed by the United National Movement [in 2009], led us to the crisis of the national currency with his inaction and wrong actions,” Ivanishvili said.

“In order to prevent sharp fall of national currencies, central banks of other countries of the region sold significant part of their reserves (Armenia – 34%; Moldova – 30%), which caused stability of their currencies as of today,” reads Ivanishvili’s statement.

Armenian dram lost 16.5% of its value against dollar and Moldovan leu – 22.3% since early November.

“The National Bank of Georgia spent only up to 5% (USD 120 million) of its reserves, which failed to yield any results,” Ivanishvili said.

The central bank sold USD 40 million on three separate occasions in February, most recently on Tuesday.

“The National Bank has relevant levers to secure stability of the currency in the condition of floating exchange rate. Exchange of rate of lari should not be more than 2 [per U.S. dollar],” the ex-PM said.

“I call on the President of the National bank to fulfill his constitutional duties and to take appropriate steps,” he said.

The central bank has not yet commented.

UNM opposition party said that Ivanishvili is personally responsible for the existing economic woes.

“The oligarch [referring to Ivanishvili] is in hysteria,” UNM MP Zurab Japaridze said. “He understands very well that he is personally responsible for depreciation of lari and for extremely difficult economic situation and he won’t be able to escape this responsibility.”