TBILISI

Georgia’s National Bank kept its key refinancing rate at 10.5 percent, its highest since 2008, to keep inflation in check as the COVID-19 pandemic pushed up prices.

The central bank’s monetary policy committee raised the rate to 10 percent from 9.5 percent at its meeting in August last year, kept it unchanged in September and October and raised it again in December to 10.5 percent.

Inflation has exceeded the central bank’s 3 percent target for several months. Annual price growth stood at 13.9 percent in December, up from 12.5 percent in November last year. On a monthly basis, consumer prices were up 0.3 percent in December from a month earlier after rising 0.6 percent in November last year.

The central bank said that high inflation since the first half of 2021 had been driven by rising international prices for food, oil and transportation.

“The current forecast is that, under other equal conditions, inflation will start to decline gradually from the spring of this year and will approach the target by the end of the year,” the bank said in a statement. “Tighter monetary policy, coupled with the adoption of temporary factors and fiscal consolidation, will contribute to this reduction in inflation.”

The bank said that economic growth in 2022, according to the baseline scenario, was projected at 5 percent.

Georgia has demonstrated double-digit economic growth last year as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, businesses reopened and tourists tentatively started to return.

Gross domestic product (GDP) grew by 10.6 percent year-on-year in 2021 after contracting by 6.1 percent a year earlier. In December alone, the economy expanded by 9.6 percent, compared with a 7.9 percent contraction a year ago and a 12 percent growth in November last year. Growth was recorded in all sectors of the economy except for construction.

In August 2021, 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 March 30.