Depreciation of the Georgian national currency Lari (GEL) has reached the point which creates “significant threat” of price hikes, prompting the central bank to start tightening monetary policy from next week, president of the National Bank of Georgia, Giorgi Kadagidze, said on January 30.

Central bank kept key rate unchanged at 4%, when its monetary policy committee held its most recent meeting in December.

“Our intervention will be gradual and of the scale that is required for securing macroeconomic stability,” Kadagidze told journalists.

GEL, which was stable throughout most of 2014, lost about 12% of its value against the U.S. dollar in a period between early November and early December. Although the Georgian national currency gained a bit by late December, GEL again started to depreciate and lost 9.3% of its value since January 1, falling to 2.0576 per U.S. dollar, it’s lowest since February, 2004. Since early November GEL fell 17.3% against USD and 5.3% against EUR.

The central bank chief also said that it has been agreed as a result of consultations with the government that there will be no deficit spending in “following months.”

Kadagidze also said that revising downwards existing 5% economic growth forecast will be needed “against the background of challenges that we are now facing in the economy.”

He said that cutting of economic growth forecast should then be followed by “re-planning of relevant fiscal and macroeconomic indicators.”

Speaking at a government session on January 29, PM Irakli Garibashvili said that the recent depreciation of Lari is caused by global factors and currencies of many other countries in the region and beyond have also depreciated against the U.S. dollar.

“We should not expect significant increase of prices because of [GEL] depreciation, especially against the background of falling oil price” PM Garibashvili said.

In an interview with Tbilisi-based Imedi TV this week, ex-PM Bidzina Ivanishvili said that the opposition UNM was trying to stir hype out of recent depreciation of GEL. He claimed that GEL depreciation “is no burden at all for the population” as it has not caused price hikes.

“Nothing special; on the contrary, it’s good; Lari demonstrates that it is healthy; what is happening in global economy, it is of course being reflected on Georgia too,” Ivanishvili said.