After the Monetary Policy Committee meeting, Koba Gvenetadze, Governor of the NBG held the first press-conference, he introduced the Committee decision to the representatives of media and spoke about the new strategy on the monetary policy communication to which the National Bank plans to move in the nearest future.
"Let me introduce one of the important decisions of the National Bank related to the new communication strategy of the monetary policy. In General the National Bank of Georgia is quite open and transparent institution. All interested persons are able to get necessary information from the NBG’s web-site. The new initiative considers that the NBG moves to the active and dynamic phase which means the regular briefings to be held four times per year, after the Monetary Policy Committee meetings. During briefings, apart from the detailed explanation of the reasons of the committee’s decision we will answer all questions concerning the monetary policy of the National Bank of Georgia, its instruments or decisions. The schedule of briefings will be known in advance, it will be published on our web-site and the media will know a briefing’s exact date and time" - Koba Gvenetadze stated.
During the press-conference the NBG Governor introduced the Monetary Policy Decision to the media representatives and spoke in detail about the factors which led to this decision.
"In the previous period due to the negative developments in the region, external shocks and GEL depreciation the inflation expectations have risen. In response to that the NBG had to tighten the monetary policy. Consistent steps taken by the NBG lead to positive results. Current estimates and forecasts confirm the decrease in inflation expectations and thus there is no need to keep monetary policy tight. Therefore we start the gradual decrease of the monetary policy rate. Today we decided to reduce the policy rate by 50 basis points. Further steps will depend on the revised inflation forecasts.
Positive tendencies are observed towards the elimination of external imbalance. The rates of decrease in exports and remittances have dropped, tourism revenues are increasing. At the same time imports continue to adjust, which helps to eliminate external imbalance. But we should not forget, that external sector has significant impact on Georgia’s economy. Global economy is still weak and there are still problems in the region countries.
Besides the policy rate, in order to encourage the attraction of funds in GEL the Monetary Policy Committee decided to reduce the minimum reserve requirement on the attracted funds in GEL from 10% to 7%. At the same time, in order to mitigate potential risks affecting the financial stability the minimum reserve requirement on the funds attracted in foreign currency has been increased from 15% to 20%. This change will be active starting from June, 16." - declared Koba Gvenetadze.
On today’s press conference Mr. Koba Gvenetadze talked about the dollarization issue and noted, that today’s decision is one of the first steps of the complex larization program.
"Recently due to the exchange rate volatility a certain part of our population, who had borrowed in foreign currency, was significantly hit. The best mechanism to avoid such problems is the decrease of dollarization and increase accessibility of GEL loans. Today’s decision is one of the first steps of the complex larization program. We intend to implement other measures as well, including measures carried out in collaboration with the government of Georgia and will inform you about them in due course" - declared the NBG governor.
On the press conference Mr. Koba Gvenetadze answered Journalists’ questions.