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renovation and construction in rural areas and on the outskirts of Georgia’s capital, Tbilisi.
Associated technical assistance will suport Credo Bank’s efforts to extend the reach of its branchless banking services to rural clients, with a specific focus on improving financial and business literacy as well as access to finance for women.
The loan is provided in Georgian lari supporting Georgia’s strategy to increase the use of local currency and reduce the foreign currency-induced credit risks of loan beneficiaries and banks.
“This is ADB’s second project with Credo and it allows the bank to expand its services to small business and rural household customers, most of whom are women,” said ADB lead investment specialist for private sector operations Rainer Hartel.
“We are proud to work with Credo Bank to reach underserved regions, boosting economic activity and affordable housing to enhance Georgia’s sustainable and inclusive growth.”
Credo is a financial service provider for households as well as micro and small enterprises (MSEs) in Georgia, serving about 230,000 MSE borrowers, 50% of whom are female. It has an average loan size of GLE 2,300.
8.2 Central Bank policy rate
Georgia’s central bank keeps policy rate at 6.5%
Georgia’s central bank sees 5% growth, inflation above target this year
Georgia’s central bank on July 24 kept its refinancing rate unchanged at a hawkish 6.5%.
The national lender is targeting 3% annual inflation. Cuts to 6.75% in January and 6.5% in March were made by the rate-setters. Annual consumer price inflation in June stood at 4.3%, up from 2.2% in June 2018, but down from 4.7% in the preceding month.
The central bank’s next monetary policy meeting is scheduled for September 4.
In May, the central bank stuck to its forecast for robust real GDP growth of 5% for Georgia in 2019. Inflation would, however, remain above the 3% target throughout the year and ease no sooner than 2020, it added. The central bank consequently envisages moderate 50bp rate cuts over the next two years, taking the benchmark rate to 6.0% in Q1, 2021.
Consumer prices have risen by 4.1% over the past 12 months in Georgia, with the country experiencing its highest annual inflation rate since January 2018, statistics office Geostat reported. Georgia’s central bank held its benchmark interest rate at 6.50% on May 1, citing forecasts that suggested annual inflation will stay close to its 3% target this year. The central bank plans to ease interest rates towards 5%-6% over the next two years, central bank governor Koba Gvenetadze told Reuters in January.
“The current macroeconomic forecast also envisages a downward trend of the monetary policy rate in the medium term,” the monetary policy report confirmed on May 8.
According to the forecast, downward pressure on inflation coming from still weak aggregate demand will be balanced this year by the effect of excise taxes on tobacco and by imported inflation along with higher intermediate
36 GEORGIA Country Report August 2019 www.intellinews.com