Georgian “Euro”-skepticism

Georgians Have Sympathies Towards the Euro, but Continue to Trust the US Dollar

“Euro can not replace dollar on Georgian currency market” – stated Merab Kakulia, Vice-President of the National Bank of Georgia.

The National Bank of Georgia and the Mission of the European Commission in Georgia held presentation of the Euro on January 16 at the Currency Museum of the National Bank.

Jacques Vantomme – Charge d’Affaires of the EC Delegation in Georgia and Peter Bekx – Head of Unit for economic issues for Asia, Latin America, Russia and NIS, as well as representatives of the foreign embassies and the Georgian banks attended the presentation of the new European currency.

According to the statement of the National Bank Vice-President Merab Kakulia, US dollar has very firm position on the Georgian market and almost 90% of transactions are in this currency.

“Therefore I do not think that Euro, regardless its initial strong positions, might shatter perspectives of the US dollar in Georgia. Besides, Euro’s advantages compared to the US dollar are not obvious yet” – says Kakulia.

Kakulia informs that the currency reserve of the National Bank for today is 160 million dollars, accumulated in both USD and Euro, but primarily in USD.

“Later we may revise the ratio, depending on tendencies on the market and economic growth rate in the US and EU” – says Kakulia. He concludes that it is early to forecast whether or not the share of transactions in Euro will increase.

Peter Bekx – Head of Unit for economic issues for Asia, Latin America, Russia and NIS, agrees with Georgian experts. He believes, that since share of EU countries in Georgia’s foreign trade is relatively small “the current situation might not change at all.” Russia, Turkey and Azerbaijan were Georgia’s main trade partners according to the data of the first half of 2001 with 41.5% total share in trade turnover; Euro-zone country, Germany, ranked fourth with 7.3%.

On January 16 Tbilisi Inter-Bank Currency Exchange set up the following rate for Euro: 1 Euro = 1,9210 GEL. Economic expert Zaza Grigalashvili informs that no Euro trades took place in January at the Exchange.

Executive Director of the Georgian Bank Association Giorgi Tsutsqiridze explains low demand on Euro by the Georgian banks with fact that the Euro just being introduced in Georgia’s EU trade partners.

Merab Kakulia informs that until March 1, 2002 national currency of every Euro-zone country may be exchanged into Euro at any commercial Bank in Georgia. After the mentioned date such operations can take place only at the particular banking institutions designated by the National Bank of Georgia.

By Giorgi Kalandadze, Civil Georgia