Page 18 - GEORptSep22

There is some lifting of the other sanctions, under this first scenario, but the process is only gradual.
Unlike the 2014-2015 shock, oil & gas and other commodity prices surge, being important for both economies. Brent hits $105 per barrel and declines to around $85 by the end of 2022.
The depreciation for RUB and UAH is around 30% and 20%, respectively, with a significant overshooting especially on the RUB side, TBC Capital experts expect.
Under this scenario, the central bank interventions and a fiscal stimulus financed externally are only moderate, if any, as the loss in net inflows compared with the 2022 baseline scenario is up to $400mn, while when compared with 2021 there is still an increase of around $170mn.
Under the delayed resolution scenario, an estimated loss in net inflows equals to around $740mn and $110mn when compared with the 2022 earlier baseline and 2021, respectively.
If the currency weakens by only 10%-15%, the central bank’s interventions estimated at $550mn would suffice.
If the currency weakens by 15% [or more] supplementary measures are envisaged.
To mitigate this shock amplifier, a hedging scheme may be introduced, though it is unlikely due to the unconventional nature of such an instrument.
18 GEORGIA Country Report September 2022 www.intellinews.com