Georgian National Bank not excludes the tightening of monetary policy

If GEL fluctuations develop into inflationary processes, the National Bank is ready to tighten monetary policy – President of the National Bank of Georgia Giorgi Kadagidze states.

"We have a floating exchange rate, which means that the GEL rate is the so-called automatic stabilizer of economic processes. During the last two years we had a deflationary rate, so there was a soft monetary policy. The development of the budget deficit in the 2nd quarter of 2013 was added to this. These factors put pressure on the national currency rate. But if we see that it grows into the inflation process, the monetary policy will be tightened in order the inflation to be within the projected figure," NBG President states.

According to Giorgi Kadagidze, the situation is particularly sensitive to those who receive salaries in GELand repay loans in dollars.

"That is why, all these years our policy is mainly designed to encourage lending in the national currency.And this course will continue," says the head of the National Bank.

Adapted from COMMERSANT