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a downward pressure on inflation over the course of the year. Given the expected reduction in the demand, there is no need to further maintain such a tightened policy stance”, said the NBG.
Despite the rate cut, monetary policy remains tight, ensuring a return of inflation to the target level in the medium term. The Monetary Policy Committee will exit the tight monetary policy stance gradually and further steps will depend on how quickly inflation expectations recede.
Georgia’s central bank reiterated its forecast for 4% GDP decline this year. Preliminary data shows that in March exports of goods fell by 22% y/y and revenues from international travelers declined by almost 70% y/y.
There was also a decrease in remittances (-9% y/y). At the same time, imports declined 13% y/y, indicating a weakening in domestic demand.
The NBG said that expected substantial donor support will help mitigate the impact of the shock on economic activity and inflation.
Considering the current level of uncertainty, both credit and liquidity risks have increased, which has been reflected in the growth of market interest rates.
To ensure that liquidity risk does not limit credit to the economy, the NBG introduced additional instruments to provide liquidity, through swap operations for both commercial banks and microfinance organisations.
8.3 ​Stock market
Georgian central bank announces new regulations as part of capital market reform
The National Bank of Georgia said on July 18 that it has drawn up two new regulations governing brokerage companies.
The aim of the regulations — the Rule of Licensing and Regulation of Brokerage Company and the Additional Rule of Regulation of Brokerage Companies Involved in High-Risk Financing Instruments — is to raise standards of service in the sector, and to protect investors’ interests and allow them to make well-informed decisions. They were drawn up as part of ongoing capital market reforms.
“It is noteworthy that the established requirements fully address the challenges
42​ GEORGIA Country Report ​May 2020 ​​www.intellinews.com