Page 26 - GEORptFeb22

(depending on the mobility restrictions) and steady increase of remittances are likely to keep compressing the deficit under the double-digit area. But the return in the low single-digit area seems still a rather remote, or at least uncertain, scenario as long as the COVID-19 crisis is far from its end.
5.1.3 Capital flows
Money transfers to Georgian households surge by 26% in first 10 months
The money transferred to Georgian households through channels such as Western Union or Zolotaia Korona increased by 26% y/y to $1.91bn (over 10% of GDP) in January-October, the National bank of Georgia announced.
These wage remittances sent by Georgians living and working abroad have significantly contributed to the resilient domestic demand that propped up economic growth but also consumer prices this year and in 2020. Compared to the first 10 months of 2019, before the crisis, gross transfers to Georgian households surged by 36%.
In net terms, after deducting the money sent by Georgian households through the same channels ($251mn), the increase was similar: +26.2% y/y to $1.66bn (just under 10% of GDP) in January-October 2021.
In October alone, the gross and net transfers to Georgian households slowed to an annual growth rate of only 13.7% y/y (to $207mn) and 11.7% y/y (to $176mn) respectively. Compared to the pre-crisis period, in October 2019, the transfers were, however, roughly 35% larger in both gross and net terms.
This year, as well as in the previous years, the largest part of the transfers to Georgian households came from Russia: $337mn (+16% y/y). The next largest sources of transfers to Georgia were Italy ($316mn, +31% y/y), the US ($234mn) and Greece ($201mn).
5.1.4 Gross international reserves
Georgia’s international reserves up by 4.7%y/y in August
Gross international reserves increased by 4.7% y/y to $4.1bn in August, according to NBG. On a monthly basis, the reserves were up by 6.3% (+US$ 243.9mn). The change in reserves reflected the receipt of SDR 202mn (equivalent to $286mn) from the IMF under a new procedure for the distribution of SDRs and the sale of $30mn on the FX market by the NBG in August.
Georgia's foreign exchange reserves reached $3.8bn in December 2021,
26 GEORGIA Country Report February 2022 www.intellinews.com