Day: June 19, 2024

On June 19, the Monetary Policy Committee of the National Bank of Georgia (NBG) decided to keep the key refinancing rate unchanged at 8%.

Inflation in Georgia remains low, the Bank says. In May, headline inflation rose by 2% annually, while core inflation was 1.7%. According to the NBG, the moderate increase in the inflation rate last month was caused by the increase in imported inflation. However, the NBG notes that the change in prices of locally produced goods is still around the targeted rate of 3%. The Central Bank notes the lowered inflation forecast, stating that, all things being equal, inflation will remain below the 3% target in early 2024 and stabilize around it in the medium term.

The NBG emphasizes that despite the positive trends, uncertainty has increased due to the domestic and geopolitical situation, which increases inflation risks. The bank notes that high exchange rate volatility makes inflationary pressures from imported inflation noteworthy. It also notes that international oil prices have recently declined, although the international food price index has been rising for the last two months. In addition, the inflation expectations have risen in recent months. Domestic economic activity is stronger than expected, driven by increased credit activity.

In view of the domestic and foreign inflation risks, the NBG says it decided to leave the key interest rate unchanged at 8%. However, “if additional risks do not materialize, the National Bank will again reduce the key interest rate to its neutral level in a prudent budgetary manner. In the event that the factors influencing inflation expectations in the direction of growth are identified again, it may be necessary to maintain the current strict position for a long time or additionally tighten the monetary policy,” – the NGB notes.

“The National Bank of Georgia continuously monitors the current economic processes and financial markets and will use all available instruments to ensure price stability,” – states NBG.

The next meeting of the Monetary Policy Committee will be held on July 31.

Also Read:

• 22/05/2024 – NBG Reduces Key Refinancing Rate from 8.25% to 8%
• 13/03/2024 – NBG Reduces Key Refinancing Rate from 9% to 8.25%
• 31/01/2024 – NBG Reduces Key Refinancing Rate from 9.5% to 9%
• 20/12/2023 – NBG Reduces Key Refinancing Rate from 10% to 9.5%

On June 18, the Special Investigation Service (SIS) reported that it issued resolutions regarding the cases of the “Tsintsabadze Group” based on the recommendations issued by the Committee of Ministers of the Council of Europe. The SIS decided to continue investigation into the “Ochigava v. Georgia” case, however determining to not open re-investigation into the “Machalikashvili and Others v. Georgia” case.

The SIS notes that in the case “Ochigava v. Georgia,” the ECHR determined on February 16, 2023, that Georgia violated Article 3 (torture) of the Convention both substantively and procedurally in relation to the ill-treatment of Akaki Ochigava, which included episodes of torture. Despite the conviction of seven Gldani Prison employees for systematic prisoner ill-treatment between 2011-2012, the Court noted that some torture episodes were inadequately investigated. Consequently, the Special Investigation Service (SIS) acknowledged the Court’s findings and deemed it necessary to continue a comprehensive investigation into Ochigava’s mistreatment, focusing on actions by certain Special Penitentiary Service employees under the second part of the Article 144³ of Georgia’s Criminal Code.

In the case “Machalikashvili and Others v. Georgia,” the European Court of Human Rights issued a decision on January 19, 2023, finding no violation of the substantive part of Article 2 (right to life) of the Convention by Georgia, and declaring the complaint inadmissible regarding Article 3. The Court noted a procedural violation of Article 2. Despite this finding, the Special Investigation Service (SIS) states that it decided to await recommendations from the Committee of Ministers of the Council of Europe before deciding on the need to renew the investigation.

In March 2024, the Committee of Ministers recommended that Georgia consider whether it was appropriate to renew the investigation. Following this recommendation, the SIS reviewed the case, which had been closed in January 2020. The SIS concluded that renewing the investigation was unnecessary, as the initial investigation was “comprehensive”, including prompt actions, extensive evidence collection, and thorough interviews. The European Court had acknowledged these efforts but also pointed out procedural shortcomings, such as the involvement of a State Security Service employee in the initial investigation and the delayed interrogation of special forces members.

The SIS says that renewing the investigation would be futile, as the identified flaws could not be corrected retrospectively. The absence of pre-operation documentation, the delayed disclosure of secret materials, and the hypothetical risk of collusion among special forces personnel were deemed insufficient grounds for a re-investigation. Thus, the SIS determined that a re-investigation would not yield new results or address the procedural issues identified by the European Court, making it unreasonable and inappropriate to pursue further investigative actions.

“The decisions made by the service regarding the cases of Machalikashvili and Ochigava will be sent to the Committee of Ministers of the Council of Europe and the applicants,” – says the Special Investigation Service.

Also Read:

• 20/11/2023 – Human Rights Watchdog Urges Swift Action on ECHR Ruling for Machalikashvili Case Investigation
• 06/04/2023 – CoE Report Says “Lack of Legislative Reform” in Georgia
• 28/01/2020 – Prosecutor’s Office Terminates Investigation into Machalikashvili Case
• 13/01/2020 – Watchdog Assesses Machalikashvili Case Materials Containing State Secrets
• 01/10/2019 – ECHR Launches Consideration of Machalikashvili Case