On April 14, the Governor of the National Bank of Georgia, Koba Gvenetadze, participated in the high-level conference organized by Columbia University on the topic Challenges to Monetary and Fiscal Policy in Small Open Economies.

The conference was held virtually this year and participants were the central bank governors, finance ministers, former central bankers, leaders from academia and financial industry from around the world.

The event is traditionally timed after the IMF/World Bank meetings in order to continue discussions started there. This year's main topic of discussion was the fiscal-monetary policy mix in response to Covid-19: challenges for EM economies.

At the meeting, Governor of the National Bank of Georgia spoke about the monetary policy challenges and neutralization of the inflationary risks. Koba Gvenetadze underlined several important factors making an impact on the dynamics of consumer prices and noted that despite the significant reduction of aggregate demand under the influence of pandemic in Georgia, the upward pressure on inflation significantly increased. Under such circumstances, the room to ease monetary policy was limited.

According to Koba Gvenetadze, in light of high-level of dollarization, depreciation of exchange rate, supply chain disruptions and increased production costs pushed the companies to increase the prices. Meanwhile, a significant upsurge in prices on international commodity markets took place from the beginning of the year. In order to avoid a negative impact on the inflation expectations, the National Bank tightened the monetary policy in March.

By the end of his speech, Koba Gvenetadze touched the importance of the adjustment of monetary and fiscal policies and emphasized that, in the short term, fiscal expenditures targeted to the urgent needs, after neutralizing the inflationary risks, will make possible to lower the monetary policy rate again to its neutral level in the medium term.

Within the framework of the International Monetary Fund and the World Bank Group Spring Meetings to be held on April 5-14, 2021, the Governor of the National Bank of Georgia participated in the various meetings including the CCA countries peer-to-peer meeting of Ministers and Central Bank Governors, MCD Governors Meeting. The Governor had a meeting with the IMF Executive Director Mr. Paul Hilbers and with the other members of the mission.