“Among many reasons, there are three main ones why prices are so high - the National Bank’s overly loose monetary policy, poor performance of anti-monopoly agencies, and the overall situation in the country, marked by significant instability, including instability for businesses,” said financier Nikoloz Shurghaia on PalitraNews’ program “Resume.”

Regarding the impact of developments in Iran on rising prices, Shurghaia noted that the war in Iran has only recently begun, while inflation had already exceeded the National Bank’s target before the conflict.

“Fuel prices have increased now, and even that has a delayed effect - some fuel was already here, some was already in transit, while the war in Iran started only recently. Electricity tariffs were increased before the war, and even before that inflation had already exceeded the National Bank’s target, reaching 4% when the target is 3%, and this has been ongoing for more than half a year.

The National Bank was saying inflation would decrease, but instead it has risen. Populist rhetoric has already crossed all limits. Among many factors, there are three main reasons why prices are so high. First is the National Bank’s overly loose monetary policy, when the money supply is larger than it should have been. These were very fortunate years for the economy, but they were not used properly; instead, there was a focus on short-term gains.

Second is the poor performance of anti-monopoly agencies - the legislation is not strong, and there are serious monopolies in the country. These sectors receive little proper attention, and oversight is often entrusted to non-specialists. Third is the overall condition of the country - significant instability, including for businesses, and even what I would call a circus performance, referring to the parliamentary price commission.

For years, the authorities managed to mislead a large part of society through propaganda, aided by economic luck. Now that economic luck is coming to an end - though it has not fully disappeared yet.

There are still residual benefits from Russia’s invasion of Ukraine - cargo flows remain, Georgia’s importance has increased significantly, and even air traffic has tripled toward Georgia, bringing higher revenues.

If there were a good government, it would take advantage of this situation. With instability both to the north and south, Georgia is in a prime position as a transit route - the Middle Corridor. Right now, there should be an investment boom in the country.

Georgia is currently failing to capitalize on these highly favorable opportunities to become an attractive destination for investment and to allow the Middle Corridor to truly flourish,” Shurghaia said.