“The situation is absolutely under control and no one should believe that GEL exchange rate devaluation is a natural phenomenon. This is the result of a targeted policy”.
It has been more than 20 years that a million has become a magical number. This number was first used in 1995 by the president Eduard Shevardnadze and the head of the parliament Zurab Zhvania when the “Union of citizens” promised one million jobs to the voters. At the elections of self-government authorities in 2014 the “Georgian Dream” gave a ‘million-worth’ promise – the candidate for the post of the mayor Davit Narmania promised the voters to plant a million trees.
As for Paata Burchuladze, he promised social benefit payment to one million people instead of half a million… However, a million-worth promise has never been kept yet. It is more than 20 years that people living in independent Georgia have been waiting for jobs, economic progress and improved social conditions. The number of the population is decreasing yearly – according to general census held in 2014, currently 3 713 804 individuals live in Georgia. Mortality is surpassing the birth rate. Annually three hundred children die of hunger and 42 thousand people have no resident houses. In return for these data, according to the information of the National Bank of Georgia, in January-June, 2017 the net profit of commercial banks reached 44 million GEL, which is 157 million GEL more than the data of similar period last year.
We addressed the expert in economy, Demur Giorkhelidze to talk about the reasons of the national currency devaluation.
-Mister Demur, in just one week from the elections the exchange rate of GEL depreciated significantly. This was the case after the previous elections…
-Elections have nothing to do with this situation. A large transaction was carried out about which we know nothing, we do not know either, what is this related to. All the costs are considered reasonably and if there is no shocking demand by any large consumer, and we know that there has been no such demand, GEL exchange rate should be stable.
There are objective reasons as well – economy is very weak, to be exact, extremely weak, the export potential is weak as well. The country has no stable source of foreign currency, Georgian currency deficit is added to it, our poor economy is covered only by 17 percent of Georgian currency, it is clear which currency is the rest… all these factors cause decrease of GEL exchange rate.
The country remains in poverty, economy is not being developed, however the banking system in Georgia shows the biggest profit in the world, not a single country worldwide has similar profit, but nobody knows at which or at whose cost such profit of banks is made. It is a fact: this is a classic banking affair, bank profit should be earned at the cost of interest rate, but it is not so in our country.
-what will be the situation of the population by the New Year who have been waiting for a million jobs for more than 20 years…
-It seems that Georgian people, at least its majority is satisfied with the current situation, that is reflected on every elections. Elections were held several days ago and we saw the people’s attitude – they have not expressed protest at anything.
-The budget calculations are based on 2.50 exchange rate of GEL to USD, this is the basis of the budget for the next year…
-GEL exchange rate has already passed 2.50 point, but it is not alarming, when needed, they will immediately set the exchange rate to desirable point. The situation is absolutely under their control and no one should believe that GEL exchange rate devaluation is a natural phenomenon. This is the result of a targeted policy. There are people in national bank who have a good understanding of monetary policy but the outcomes are bad. This means that it is a targeted process.
-What is the purpose of the national currency devaluation?
-The purpose of GEL exchange rate fluctuation is clear – the country is getting poorer, while some small groups are receiving unprecedented profit and getting richer.