Central bank keeps refinancing rate at 11%
The NBG named the “record level” of remittances, tourism recovery and strong credit activity among the reasons for the rapid growth of economic activity in the country. Photo: Nino Alavidze/Agenda.ge
Tweet 
Share
The National Bank of Georgia has decided to keep the refinancing rate unchanged at 11 percent following a meeting of its Monetary Policy Committee on Wednesday.
The country’s financial institution highlighted inflationary risks still remained a “current global challenge,” noting elevated prices on international markets “severely affected” most countries worldwide, including Georgia.
The sanctions imposed against Russia and the additional supply-side disruption stemming from the Russia-Ukraine war have significantly raised international prices on food, energy and other commodities,” the bank said.
It also noted the inflation rate in Georgia remained high, amounting to 11.5 percent in July and forecasted the figure would tend to decline in the current and next years, adding it would gradually approach the target level from the second half of 2023.
A faster decline in inflation is hindered by growing aggregate demand, to which high consumption makes a significant contribution [...] Against the backdrop of consecutive shocks, inflation has long deviated from the target level, which further amplifies inflationary risks,” the central bank concluded.
The NBG named the “record level” of remittances, tourism recovery and strong credit activity among the reasons for the rapid growth of economic activity in the country.
Additionally, it said the credit activity was still high during the ongoing year despite the tight monetary policy, naming excessive growth of consumer loans and foreign currency loans as the reasons for the latter. The NBG predicted the economic growth in the country in 2022 would reach 9 percent.
The next meeting of the MPC in Georgia will be held on September 14.
Fitch Ratings, a global financial ratings firm, has affirmed Georgia’s Long-Term Foreign-Currency Issuer Default Rating status at a BB level, with a “stable” outlook for the country’s financial developments.
The Georgian economy grew by 7.2 percent in June and by 10.5 percent in the first six months of 2022 year-on-year, the latest data from the National Statistics Office of Georgia show.
Commercial banks in Georgia loaned ₾43.65 billion ($14.85bln) and received deposits of ₾38.27 billion ($13.02bln) in June 2022, the latest data from the National Bank of Georgia shows.
Georgia received $427.4 million from abroad in June 2022, which is 111.7 percent more than the amount in June 2021, says the National Bank of Georgia.
The Consumer Price Index in Georgia increased by 0.2 percent in July month-on-month, while the annual inflation rate totalled 11.5 percent, the National Statistics Office of Georgia announced on Wednesday.
Georgia received $306 million from abroad in July 2022, which is 46.8 percent more than the amount in July 2021, says the National Bank of Georgia.
Commercial banks in Georgia loaned ₾42.09 billion ($14.85bln) and received deposits of ₾38.75 billion ($13.67bln) in July 2022, the latest data from the National Bank of Georgia shows.
Commercial banks in Georgia loaned ₾43.21 billion ($15.30bln) and received deposits of ₾41.76 billion ($14.78 bln) in August 2022, the latest data from the National Bank of Georgia shows.
The national bank of Georgia has decided to keep the refinancing rate unchanged at 11 percent following a meeting of its monetary policy committee on Wednesday.
While annual inflation in Georgia has “passed the peak” and is on a downward trend, the country’s National Bank will pursue a “tight monetary policy” throughout the year to “reduce the risk of rising inflationary expectations” in the medium term, the Bank announced on Wednesday.