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Georgia Plans Measures to Ease Pressure on Exchange Rate as Lari Hits New Low

Georgia is planning steps to ease the pressure on the lari currency, which hit a record low on Tuesday, including taking some of the burden off individuals repaying dollar mortgages and banning online credit services, the prime minister said.

The former Soviet republic has been hit by a drop in exports and remittances and a plunge in the Russian rouble.

While remittances have been growing again, the lari has begun to slide further, hitting an all-time low of 2.5311 to the dollar on Tuesday, down from 2.5026 on Monday.

Prime Minister Georgy Kvirikashvili said the government was planning measures including fixing the exchange rate for individuals repaying mortgages in dollars 20 points lower than the market rate, with the difference to be subsidised by the government.

“According to our plan, loans which had been disbursed to individuals before Jan. 1, 2015, and supported by real estate, would be recalculated in lari at a rate which is lower than the current by 20 points,” Kvirikashvili told reporters.

“For example, if the rate today is 2.5 lari per dollar, the credit will be calculated at a rate of 2.3 lari per dollar.”

Another measure envisaged is a ban on issuing credit online.

“We are working on a consumer rights law together with the central bank, and online credit services will be banned,” he said.

Government sources told Reuters that the government was also planning to raise excise duties on cigarettes, alcohol and imported cars.

Source: Reuters