Page 34 - GEORptFeb21

many Georgians into a debt trap.
Given the country’s meagre pensions, elderly Georgians – unless they are supported by their children – usually need to borrow money just for day-to-day expenses. About ​half​ of retired Georgians have bank loans. And the institution that has a virtual monopoly on the distribution of pensions, Liberty Bank, also charges a whopping 31% annual interest rate to borrowers on pensions. Because they have steady, albeit small, incomes, Georgians on pensions are often the only members of poor families who are eligible to get credit at all. That means they borrow on behalf of the entire family, as well as to pay for their own medication. On average, Georgian pensioners spend between 65 and 80 lari ($20-25) a month servicing debts, Mikheil Svanidze, a Tbilisi-based sociologist, told Eurasianet.
While debt had been a significant problem for financially vulnerable Georgians before 2020, with the arrival of the ​COVID-19 pandemic​ the country’s entrepreneurs were hit, as well.
7.0​ FX
Georgia - Foreign exchange rate
2016
2017
2018
2019
Mar’20
Jun’20
Sep’20
Dec’20
Currency (units per EUR) (average)
2.617
2.832
2.991
3.155
3.360
3.424
3.743
3.996
Currency (units per USD) (average)
2.367
2.509
2.534
2.819
3.041
3.042
3.172
3.286
Georgia’s currency loses 5% amid post-general election strife
Georgia’s currency has weakened by 5% in the four days from November 2, when the central bank’s first substantial intervention this year on the forex market, with a sale of $60mn, was introduced with the aim of preventing exchange rate slippage amid the political uncertainty subsequent to the October 31 general election.
The government blamed the opposition for the exchange rate deterioration and recommended protesters are subject to "less mobility" in order to counter the spread of the coronavirus, something which has also had an impact on the standing of the Georgian lari (GEL).
The opposition parties that won parliamentary seats in the election have agreed to boycott the legislature, accusing the ruling Georgian Dream party of having rigged the poll. With 74 seats after the first round of voting, Georgian Dream is close to gaining more than 50% of parliament’s seats, with a second-round ballot scheduled for November 21. Seventeen of the parliament’s 150 seats are to be distributed following a second round applicable to single-mandate majoritarian constituencies.
Besides the political turmoil, the second wave of the coronavirus pandemic in Georgia and abroad has played a role in the lari’s weakening, with tightened restrictions set to result in a slower economic recovery and thinner tourism revenues—particularly important for the balance of payments severely hit this year.
The National Bank of Georgia (NBG) pointed to exchange rate issues—due to the still high dollarisation seen in the economy, room for easing monetary
34​ GEORGIA Country Report​ February 2021 ​ ​www.intellinews.com