“Raising the refinancing rate by 0.25 percentage points is not just a dry economic decision; it is a direct blow to hundreds of thousands of Georgian citizens whose loans are tied to the refinancing rate and who will have to pay increased monthly installments starting with their next payment,” stated Tazo Datunashvili, one of the leaders of Lelo – Strong Georgia (an opposition political union).
“Absolutely all branches of government—both those involved and those not—under the leadership of Irakli Kobakhidze, are misleading the Georgian population by claiming there is no inflation in the country and that price increases are caused by some ‘magical’ phenomena and external processes. Today, the National Bank admitted that inflation exists, and it turns out that this is its area of responsibility, and no one else’s.
I want to clearly explain once again what this decision means for our citizens. First, virtually every second family in the country will have to pay more in bank payments. Instead of making life easier for citizens in a difficult situation and providing them with benefits at a time when prices for everything are rising, the government is reaching even deeper into the pockets of the citizens.
Second, this is a stifling of business and economic processes: on one hand, payments for all citizens will increase, and on the other, loans for businesses will become more expensive. This means that businesses will not invest in development, leading to stagnation and, in some cases, additional price hikes.
Third, the National Bank is fighting the symptom, not the cause. We understand perfectly well that the causes of inflation in a normal situation differ from the current one. Our citizens do not have excess funds right now; inflation is rising not because of that, but because all basic consumer goods are becoming more expensive due to import dependence, state service prices are increasing—with citizens paying two to three times more for any public services—and utility tariffs have also risen since April 1.
All of this, combined with inflation, creates an unstable environment that the authorities are trying to control by making loans more expensive for citizens, instead of taking steps that could actually ease the people’s situation—for example, temporarily abolishing the fuel excise tax and reducing VAT on food products.
Instead, citizens are once again forced to pay out of their own pockets for the government’s ill-conceived economic policy, which is impoverishing the country,” stated Tazo Datunashvili.