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 meeting in August and kept it unchanged in September.

Inflation has exceeded the central bank’s 3 percent target for several months. Annual price growth stood at 12.3 percent in September, slightly down from a record high of 12.8 percent in August. On a monthly basis, consumer prices were up 0.2 percent in September from a month earlier after rising 0.7 percent in August and in comparison with 0.7 percent inflation in September 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.

“High inflation is mainly due to one-off factors, which became evident globally in 2020-2021,” the central bank said in a statement.

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

“In December 2021 and January-February 2022, the base effect of the utility fee subsidy programme will have an additional upward impact on the annual inflation,” the central bank said. “According to the current forecast, other things equal, inflation will decline starting from spring 2022.”

Georgia’s gross domestic product (GDP) grew by 12 percent year-on-year in January-August after contracting 5.6 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 central bank’s monetary policy committee will be held on December 8.