Page 32 - bne IntelliNews Georgia country report October 2017

The central bank previously eased monetary policy by reducing its key rate from 8% to 6.5% in 2016, when the Georgian lari appeared to have stabilised following a steep depreciation in 2014-2015. However, the exchange rate began to oscillate again in early 2017, prompting more monetary tightening. According to the central bank, the rise in inflation will be temporary, and it is expected that the upward trend will reverse in the second half of 2018.
"Hence, other things being equal, there is no need for further policy tightening. Given the absence of additional shocks and with the elimination of the impact of the one-time factors affecting inflation, the policy rate in the medium term is expected to decrease to its neutral level in the medium term," its statement read.
The regulator said it would monitor developments in the economy, after receiving "mixed signals" from demand-side factors affecting consumer prices. "On the one hand according to the preliminary estimates economic growth slowed down in April, compared to previous months; on the other hand export revenues (including those from tourism) have grown at a high rate. The volume of remittances has also been growing. If the growth trend in external demand is maintained, the gradual decrease in the current account deficit can be expected," it concluded.
8.3 Stock market
Georgia has been the beneficiary of not one, but two lari-denominated bonds issued by the EBRD in the last year. On April 25, the bank issued the first lari-denominated Eurobond , worth GEL120mn (€46.7mn), on the London Stock Exchange. The move came after the EBRD made a GEL107mn public bond issuance on the Georgian Stock Exchange (GSE) in Tbilisi last June.
Part of the bank's drive to develop local capital markets, the bond issuances are bound to spur investor confidence in the Georgian economy, George Paresishvili, GSE's CEO, told bne IntelliNews in a telephone interview. The privately-owned Georgian bourse has seen activity on it dwindle in the aftermath of the Russian invasion of 2008 and the economic crisis of 2009.
32 GEORGIA Country Report October 2017 www.intellinews.com