Inflation rate was 1.3% y/y and 0.1% m/m in February 2015
The annual inflation rate in Georgia was recorded at 1.3% in February 2015 according to GeoStat. Overall price changes were driven by the price increases on healthcare (+6.4% y/y, 0.67ppts), food and non-alcoholic beverages (+1.9% y/y, 0.60ppts), and alcohol and tobacco (+8.1% y/y, 0.42ppts), while prices in the transport group decreased by 7.8% y/y (-0.94ppts).
February monthly inflation rate was 0.1%. Price increases on healthcare (+0.9% m/m, 0.09ppts) and alcohol and tobacco (+1.0% m/m, 0.05ppts), and a price drop in the transport group (-2.4% m/m, -0.27ppts), caused by lower fuel prices, were the major drivers of the monthly inflation rate in February.
Total tax collection increased 6.5% y/y in 2M15
Consolidated budget tax collection increased by 6.5% y/y, reaching GEL 1.05bn (13% of annual plan) in 2M15. The budgeted tax collection in 2015 is 11% higher than the 2014 annual estimate. Personal income tax receipts increased by 4.5% y/y (accounting for 28.4% of total), VAT receipts by 6.5% y/y (54.6% of total), excise tax receipts by 16.7% y/y (11.7% of total) and profit tax receipts by 12.3% y/y (3.2% of total); the rest (receipts from property tax and customs duties) decreased, but they have a minor share in total tax receipts. In 2M15 state budget expenditures reached GEL 1.3bn (+12.9% y/y), comprising 13.5% of the annual plan and 60% of the 1Q15 plan. The government has announced a plan to decrease current expenditures in 2015 in light of the reduced growth forecast.
Gross international reserves stood at US$ 2.5bn end-February 2015
Gross international reserves stood at US$ 2.5bn (-5.4% m/m) and net foreign assets of NBG stood at US$ 2.23bn (-5.8% m/m) as of end-February 2015, according to NBG. The decline was driven by the NBG FX interventions in February. The IMF mission visiting Georgia during February 23-March 4, 2015 commented, “The mission fully supports the NBG’s policy to refrain from intervening in the foreign exchange market and to allow the Lari to float. The main objective of the NBG is to ensure price stability: achieving this goal depends on having a floating exchange rate. In addition, the floating rate allows the exchange rate to absorb external shocks. Intervening to resist shocks that will likely be long-lasting would only waste Georgia’s foreign currency reserves and slow the reduction of Georgia’s trade deficit with the rest of the world.”
