March 18, 2020 / 11:27 AM / 23 days ago

UPDATE 1-Georgia's central bank keeps refinancing rate at 9%

(Adds more info, details)

By Margarita Antidze

TBILISI, March 18 (Reuters) - Georgia’s central bank left its key refinancing rate unchanged at 9% on Wednesday, while saying it did not rule out holding an extraordinary meeting on the rate before the scheduled date of April 29.

The central bank had been raising rates since September as annual inflation exceeded its 3% target but kept the rate unchanged at 9% at the last meeting in January.

Consumer prices in Georgia rose 0.3% month-on-month in February after rising 0.7% in January. Annual inflation in February stood at 6.4%, up from 2.3% in February 2019 but in line with January this year.

“Taking into account that the situation is changing very quickly, the central bank does not rule out holding a monetary policy extraordinary meeting before April 29,” the central bank chief, Koba Gvenetadze, told a briefing.

The coronavirus crisis has caused a fall in the lari currency, which traded at an historic low on Wednesday of 3.08 to the U.S. dollar, putting pressure on inflation.

Gvenetadze said that if this continued, the central bank did not rule out monetary policy tightening. The further spread of coronavirus was likely to threaten Georgia’s economic growth forecast of 4.5% this year, he added.

The South Caucasus country of 3.7 million reported 5.1% year-on-year growth in January.

Georgia has closed its borders with neighbouring countries, banned entry of foreigners, closed winters resorts, restaurants, cafes, nightclubs, gyms and swimming pools and banned minibuses in an effort to slow the spread of COVID-19.

It has reported 38 confirmed cases of coronavirus. One patient has recovered, more than 1,200 people with suspected infections remain in quarantine, while 216 are being monitored in hospitals, authorities said.

Finance Minister Ivane Machavariani said Georgia will soon unveil a “substantial financial stimulus package”. Georgia plans to draft measures to support the economy together with donor organisations, and the International Monetary Fund will be playing a key role in this process, he said.

The Fund’s representative, Selim Cakir, told a briefing the IMF “is committed to provide support to Georgia under these challenging and uncertain circumstances.” (Editing by Alex Richardson and Peter Graff)

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