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Whilst speaking about the policies of the National Bank towards the depreciation of GEL, the President of the National Bank of Georgia, Giorgi Kadagidze, stated: "The policies of the National Bank of Georgia are positively assessed by all international organisations and partners."

FactCheck

took interest in this statement and verified its accuracy.

Due to the depreciation of GEL, the National Bank of Georgia has on many occasions been accused of both an incorrect monetary policy as well as an intended depreciation of the national currency. The most severe accusations could be heard from Bidzina Ivanishvili and members of the Government of Georgia.

In June 2015, the Manager of the World Bank Reserve Management and Consultation Programme, Christian Malder, assessed the policies exercised by the National Bank of Georgia (in the field of reserve management) as positive and successful. According to him, the National Bank of Georgia is one of the best participants of the programme and its policies in the past months absolutely correspond to leading international practices. According to Mr Malder’s statement, a significant intervention from the state is not effective whilst the intervention of the National Bank of Georgia during the period of the depreciation of GEL was both sensible and reserved. The monetary policies exercised by the National Bank of Georgia were also positively assessed by the Regional Director of the World Bank in the South Caucasus, Henry Kerali.

The President of the European Bank for Reconstruction and Development (EBRD), Suma Chakrabarti, has also assessed the monetary policy of the National Bank of Georgia as successful and exemplary. He made a statement about this issue during his visit to Tbilisi on 12 May 2015. According to Mr Chakrabarti, it is important to maintain reserves and take good care of them which has been successfully implemented in the case of Georgia. Another high-ranking EBRD official, the Deputy Director of the Middle East and Central Asia Department, Iuha Cah-Colen, has further positively assessed the work of the National Bank in crisis situations. According to him, it is important for the National Bank of Georgia to have complete freedom in choosing the banking instruments it uses in order to maintain a low level of inflation.

Another authoritative organisation, the International Monetary Fund, considers the work of the National Bank of Georgia to be successful and calls on the Government of Georgia to more actively coordinate with it. According to the 4 March 2015 statement made by the organisation’s Head of Mission, Mark Griffiths, it is important to preserve the independence of the National Bank of Georgia for its future success and this is threatened by political attacks. A representative of the International Monetary Fund in Georgia, Azim Sadikov, also assessed the steps taken by the National Bank of Georgia in crisis situations. He believes that the policies conducted by the National Bank are one of the most correct in the Caucasus and Central Asia the as they employ reserved currency interventions.

In 2015, a well-known British journal, The Banker,

named the President of the National Bank of Georgia, Giorgi Kadagidze, as the Central Bank Governor of the Year in Europe. Stability during major shocks and the stability of the banking sector were some of the reasons for the President of the National Bank of Georgia to be granted this status. Mr Kadagidze is the first in the Caucasus region to garner such recognition.

On the contrary, international organisations have negatively and critically assessed

the decision of the Parliamentary Majority to take away the function of financial supervision from the National Bank of Georgia. On 27 June 2015, the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development and the Asian Development Bank sent a highly critical letter to Irakli Gharibashvili and Davit Usupashvili. According to the position of these organisations, the aforementioned legislative changes will hinder the stability of the country’s financial sector previously ensured by the National Bank of Georgia.

Despite such assessments, the Parliamentary Majority adopted the changes and separated the financial supervisory function from the National Bank of Georgia. However, the Parliamentary Opposition has appealed to the Constitutional Court of Georgia against these legislative changes. According to the assessment of the opposition, taking away the financial supervision department from the National Bank and establishing it as a separate structure is unconstitutional. The Constitutional Court has taken the appeal under consideration and stopped the operation of the Financial Supervision Service (as a separate agency) until reaching a final decision.

The aforementioned decision of the Constitutional Court has caused a major outcry in the governing coalition. Commenting on this issue, the Chairman of the Finance and Budgetary Committee of the Parliament of Georgia, Tamaz Metchiauri, stated: "Despite my deep respect to the court of any instance, the Constitutional Court is a direct supplement of the United National Movement and nothing more… it is not excluded that the Constitutional Court will make a decision according to the preference of the United National Movement. This is being done for destabilisation. I would like to say that there are other ways to see what is really happening in the National Bank of Georgia; for example, the creation of an investigative commission."

Conclusion

All major international organisations have positively assessed the policies conducted by the National Bank of Georgia during the past years. The restricted use of reserves in the period of the depreciation of GEL was assessed to be the only correct way.

Hence, FactCheck concludes that Giorgi Kadagidze’s statement is TRUE.

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