TBILISI

Georgia’s National Bank kept its key refinancing rate unchanged at 10 percent, its highest since 2008, to keep inflation in check as the COVID-19 pandemic pushed up the price of oil and gas imports.

The central bank’s monetary policy committee raised the rate to 10 percent from 9.5 percent at its last meeting in August.

Inflation has exceeded the central bank’s 3 percent target for several months. Annual price growth was a record high of 12.8 percent in August, up from 11.9 percent in July. On a monthly basis, consumer prices were up 0.7 percent in August from a month earlier after rising 1.3 percent in July and in comparison with 0.02 percent deflation in August 2020.

Rising prices in world agricultural markets, compounded by exchange rate depreciation in previous periods meant the impact of imported goods and food prices on inflation was still high, the central bank said.

“The driving forces of high inflation are still predominately one-off and independent from monetary policy,” the central bank said in a statement.

The bank said annual inflation was expected to remain high for the rest of the year.

“According to the current forecast, other things equal, inflation will decline significantly from spring 2022, which, along with the fading-out of temporary factors, will be facilitated by tight monetary policy and fiscal consolidation,” the bank said.

Georgia’s gross domestic product (GDP) grew by 12.2 percent year-on-year in January-July after contracting 5.8 percent in the same period last year, as the country eased the majority of the restrictions it had imposed to curb the spread of the coronavirus.

Georgia revised its economic growth forecast to 7.7 percent from a previous projection of 4.3 percent in 2021 amid signs of economic recovery and in line with the International Monetary Fund’s (IMF) current projection.

In August, Fitch Ratings revised the outlook on Georgia’s long-term foreign-currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDR at ‘BB’.

The next meeting of the National Bank’s monetary policy committee will be held on October 27.