Georgia refuses from dollars

Georgia refuses from dollars

The Georgian Prime Minister Giorgi Kvirikashvili believes that there is no alternative to dedollarization and strengthening confidence in the Georgian national currency in the long term.
"We must take comprehensive steps. For this purpose, bonds denominated in national currency are emitted in collaboration with the international financial institutions," he said.

"Furthermore, planned long-term economic programs are aimed at improvement of the country's balance of payment, this will limit country's dependence solely upon money transfers," the Prime Minister noted.

By carrying out comprehensive measures we will ensure that the long-term confidence in the currency will further strengthen, Kvirikashvili pointed out.

"This pension reform, which is scheduled for 2017, will also help it," he added.

The president of Georgia’s National Bank, Koba Gvenetadze, said that the national currency should be a priority in the country and people should get used to living without dollars.

"Today, the main problem in the Georgian financial system is the high rate of dollarization. Countries with low inflation, a two-way fluctuation of the exchange course, as a rule, should not have so high rate of dollarization," he noted

Gvenetadze stressed that dedollarization process is not easy and the National Bank is actively working in this direction.

It is impossible to gain Georgian citizens' confidence in the national currency using administrative measures, GEL must earn the trust on its own, the head of the Center for European Studies Kaha Gogolashvili, speaking with a correspondent of Vestnik Kavkaza, said.

"The level of dollarization is quite high now. The government is trying to stop the fall of GEL against the dollar. But it is unclear whether they will make it administratively. Confidence in the currency should increase by itself," the expert said.

He explained that among the population and the state have very large dollar reserves. "People often use conversion: GEL earned money are kept in dollars and then are converted back. Apparently, the government wants to change this practice," the head of the Center for European Studies said.

"It is not clear how they want to do it. The authorities cannot ban people from keeping dollar deposits, that would be silly. Maybe they will ask businessmen not to tie prices to the dollar and so on," Kakha Gogolashvili suggested.

The editor-in-chief of the Ekonimika Gruzii magazine, Emzar Dzhgerenaya, touched another negative side of dollarization of the Georgian economy.

"Dollarization is an acute problem for the entire population, because the population took out US dollar loans, and now it is very sensitive to changes in the lari exchange rate to the dollar," he said, explaining that the problem of dollarization is primarily of social nature.

"But this issue cannot be solved in a month or two. Dedollarization will take at least ten years," the expert warned.