09.Dec .2020 18:00

Koba Gvenetadze: My Apologies to the Business Persons if My Answer Caused Anger

Koba Gvenetadze: My Apologies to the Business Persons if My Answer Caused Anger
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"I absolutely understand the business persons, and my apologies if my answer caused anger," said Koba Gvenetadze, the President of the National Bank of Georgia, in response to a relevant question from bm.ge.
One of the statements made by the Governor of the National Bank at a press conference on September 16 regarding the depreciation of the lari caused anger in several business persons. "Exchange rate risk is one of the basic elements of business financial management. Any business should manage its affairs taking into account the variability of the exchange rate and try to minimize these risks," said the Governor of the National Bank at the time.
Two months after this statement, Bm.ge again asked Koba Gvenetadze how he would protect himself from the GEL exchange rate's frequent fluctuations and what advice he would give business people.
"It is important for us not to hide anything. I strive to answer your questions and take rational steps to respond to the challenges we face. We are talking about a pandemic, a huge crisis, and at this time, the challenges are on the side of both business and government.

Dollarization reduction measures, hedging tools should be used in this case, but it should be adapted to what kind of organization it is - be it a corporate business or something else; The fact is that when it comes to responsible lending, such steps are often perceived as very painful, but when something happens, then we realize that if such a thing had not been done, the situation would have been much more difficult; It's wrong to assume that nothing will ever happen," Koba Gvenetadze said.

He cited the Russian air embargo last year as an example, which the NBG president said was a major challenge, and like the air embargo, no one could have imagined such a shock today.

"If we wouldn't have taken the necessary measures, we would have been in a worse situation today. Such an approach is needed from the business side as well. Yes, risk assessment is required. I understand their frustration, but these risks should probably be taken into account at the expense of reducing profits" - said Gvenetadze.