Georgian Prime Minister Giorgi Kvirikashvili said on November 13 when commenting on depreciation of Georgian national currency Lari (GEL) against U.S. dollar that misbalance between imports and exports is the main reason behind GEL depreciation and noted that the government plans to introduce new regulations in coordination with the National Bank to ensure strengthening of the Georgian currency.

GEL fell from 2.3365 per U.S dollar on October 12 to 2.4899 on November 12 that is slightly below its record low 2.4985 in late January; GEL started depreciation in November, 2014.

The National Bank’s October 12 intervention was the last one, when it sold USD 40 million. Since the start of this year the central bank sold total of USD 240 million and bought USD 278.35 million in 23 interventions.

Gross international reserves stood at USD 2.760 billion as of October, down from USD 2.858 billion a month earlier and up from USD 2.449 billion a year earlier.

PM Kvirikashvili, whose government has been frequently criticized for recent depreciation of Georgian currency, said that “it can be explained by a positive process in the country.”  

“These fluctuations in lari exchange rate can be explained by the fact that imports have increased significantly, consumption has increased significantly in the country; so have out exports, but due to decreased prices on our export markets, our exports lag behind imports; so this is the reason of what is happening right now,” he told reporters.

Georgia’s exports fell by 7% y/y in January-October, 2016 to USD 1.7 billion and imports were up by 31% y/y to USD 8.24 billion – but excluding one-off import of C hepatitis medicines, imports fell down by 2% to USD 5.85 billion y/y with trade deficit amounting to USD 4.15 billion excluding one-offs. Georgia’s foreign trade turnover in the first ten months of 2016 increased 22% year-on-year to USD 9.95 billion.

“We have already started to correct imports and the exchange rate will definitely be stabilized,” Kvirikashvili said. “I hope that in the following months GEL will be strengthened and some new steps will be taken in terms of regulations in order to help GEL stabilization and strengthening.”

He declined to talk about these “new steps”, but noted that this plan will be unveiled in a couple of days in coordination with the National Bank.