Ryan Hamilton Davis
The effect of the rise in fuel prices announced in the budget should be felt by the majority of the population as early as next quarter, the Central Bank said in its latest monetary report, published on Friday.
For now, the country is still facing high inflation and a shrinking energy sector.
The Central Bank, referring to CSO statistics, said there was a marginal decline in real GDP of 0.1%, year-on-year, in the first quarter of the year. The energy sector also contracted by 5.1%.
“The energy sector has been hampered by declines in natural gas production and LNG refining,” the central bank said.
The Central Bank added that food inflation rose to 10.3% in July and core inflation to 4.9%. Unemployment reached 5.1%, compared to 4.9% in the previous quarter.
The central bank, however, said monetary and financial indicators point to strengthening demand for credit and point to ample liquidity.
“Excess commercial bank reserves at the Central Bank stood at $4.4 billion as of mid-September 2022,” he said. “Credit to the private sector increased by 6.6% in July.”
The Central Bank said the expansion was driven by robust growth in business loans, a pickup in consumer credit and buoyant home mortgages. There were also notable increases in loans for construction, manufacturing and distribution.
The central bank, taking into account all factors, decided to maintain the repo rate at 3.50%.