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weakened further prompting a central bank intervention to keep the lari above the psychologically important threshold of GEL 3 to the dollar.
Georgia’s central bank on October 23 raised its key refinancing rate by 1pp to 8.5%, thus continuing its efforts to curb inflation partly fuelled by expectations for imminent currency depreciation. The central bank hiked its key interest rate twice in September by 50bp each time. The Georgian lari has remained undervalued.
On the political front, Georgia’s ruling party Georgian Dream led by country’s sole billionaire, oligarch and ex-PM Bidzina Ivanishvili, remains the most popular single party in the country—however, it was losing support even before the November 14 vote in parliament that prompted street protests as lawmakers broke their promise to bring in a proportional voting system ahead of the 2020 general election, a poll commissioned by the International Republican Institute (IRI) showed.
The deterioration in the economic situation of households, felt particularly keenly by voters as inflation is accelerating, was a key driver in the loss of popularity besides what was broadly seen as the disproportionate action of the police against protesters during the June 20-21 rallies. Addressing economic issues might be an opportunity for parties eager to capitalise on the large share of undecided voters, IRI observed. The first IRI national poll conducted in Georgia since the anti-Kremlin protests in June indicated “a continued deficit of trust in the government.”
2.0 Politics
2.1 Russia “keeps thinking” of lifting Georgia flight ban
“We will continue to think about how, when and in what form we can resume direct flights [to Georgia from Russia],” Deputy Minister of Foreign Affairs of Russia and member of the Upper House of the Russian Parliament Grigory Karasin has said—quite unexpectedly linking the flight ban topic to developments on the streets of Tbilisi, where protesters have been demanding Georgian ruling party Georgian Dream introduce elections based on proportional representation voting in time for next year’s general election.
Karasin, speaking in Prague after a meeting with Zurab Abashidze, special representative of the Georgian prime minister, also said that he believed that the issue regarding doctor Vazha Gaprindashvili (a Georgian doctor abducted in South Ossetia by Russian separatists), would be resolved in the near future.
While speaking about the flight ban, introduced after anti-Kremlin protests in Tbilisi during the early summer, Karasin said “an immediate solution to the problem is not expected before next year.”
“We will continue to move forward in this direction. We can't expect an instant solution of the problem regarding resumption of the direct flights, but we'll keep thinking about how and when we can resume direct flights. An agreement has been reached in connection with this issue. We will think and observe the trend of development of bilateral relations and the atmosphere regarding the
6 GEORGIA Country Report December 2019 www.intellinews.com
