Page 46 - GEORptJul22

Monetary Policy Committee will take place on August 3, 2022.
On 30 March 2022, the National Bank of Georgia (NBG) raised the refinancing rate by 0.5ppts to 11.0%. This decision was mostly driven by the rise in global commodity prices affecting Georgia via high oil prices as well as a wave of monetary policy tightening across the regional countries. The NBG’s communication remained balanced like in previous releases, citing that monetary policy will keep a tightening bias until the risks of rising inflation expectations are sufficiently mitigated.
The NBG's expects GDP growth in the range of 3-4% in 2022, revised downwards from the initial forecast of 5.0%.
Credit activity is expected to be moderately high during the year, despite tightened monetary policy and recent macroprudential measures. In a recent Q&A session, the NBG governor commented that the annual credit growth is expected at 10-15% in 2022.
8.3 Capital market
Georgia’s central bank successful in de-dollarisation, responsible lending, says World Bank
The World Bank, within the framework of the Financial Sector Assessment Programme (FSAP) has given a positive assessment to the work of the National bank of Georgia (NBG) under the FSA Assessment Report.
Successes in de-dollarisation and more responsible lending are highlighted, while the development of capital markets is seen as a target to be pursued in the future.
According to the document, there has been a strong focus on the development of the capital markets in Georgia in the last few years already.
Well-developed domestic capital markets could contribute to Georgia’s sustainable economic growth, the WB argues. In the context of bank dominance in the financial sector and still high dollarization, capital market development could also contribute to more effective mobilization of domestic savings, diversification in the sources of financing for the corporate and household sector, including access to debt in longer tenors.
According to the World Bank report, significant progress has been made since 2017 towards implementing a risk-based supervisory framework, supported by
46 GEORGIA Country Report July 2022 www.intellinews.com