Page 45 - GEORptJun22

Georgia sells GEL181.9mn in treasury notes and GEL40mn in treasury bills in January
The NBG predicts that inflation will remain above the target during the year, but "against the background of tightened policies, it will tend to decrease." According to the NBG, lending activity through consumer and foreign currency loans will remain high throughout the year. Consequently, the existing 25% upper limit of required reserves on funds attracted in foreign currency may be increased.
“As for external demand, there were signs of a significant recovery in the first quarter of 2022, but against the backdrop of hostilities, the risks in this area are high,” the NBG added. According to the updated forecast of the NBG, economic growth is expected in 2022 at the level of 4.5%. The next meeting of the Monetary Policy Committee will take place on June 22, 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.
The monetary policy committee of the NBG on December 8 increased the refinancing rate by 0.5 pp to 10.5%, in the fourth rate hike in 2021. Loose fiscal policy, imported inflation and aggregate demand have all contributed to the persistent double-digit inflation.
In January 2022, GEL181.9mn in treasury notes and GEL40mn in treasury bills were sold, reports bank Galt & Taggart.
Weighted average interest rate on 10-year instruments was 9.833%, on five-year notes was 9.795%, on two-year notes was 9.928%, on 1-year instruments was 10.007%, and it stood at 10.193% for six-month instruments. Notably, non-residents’ treasury holdings increased 4.8% m/m to GEL525.8mn in December, after a 21.7% m/m growth in November. As a result, the share of non-residents in total outstanding holdings increased by 0.2ppts m/m to 9.6% in December.
45 GEORGIA Country Report June 2022 www.intellinews.com