In reaction to double-digit inflation showing no signs of slowing down, Georgia's government has committed to raise pensions and pay for state employees.

Consumer prices rose 12.5% year over year in November, according to the National Bank of Georgia, four times the objective set for 2021 and for the third month in a row. Last month, food costs were 17% higher than in November 2020. Due to greater gasoline costs, transportation prices have climbed by more than 20%.

The central bank, which is responsible for preserving price stability, blames the epidemic for rising commodity prices and trade disruptions, while also admitting the role of fiscal stimulus.

On December 6, the government unveiled its proposed budget for 2022, proposing a 1.6% increase in spending to a total of 19.7 billion lari (about $6.3 billion). At the same time, the government intends to increase tax collection efforts by around 1%, bringing total revenues to 13.4 billion lari.

The Health Ministry, which distributes pensions, will continue to be the government's largest spender, with a budget of $1.9 billion, up nearly 10% from 2021.

Pensions will climb 20 lari ($6.40) each month for those under 70 and 25 lari for those 70 and over, according to Prime Minister Irakli Garibashvili. Pensions will get an additional 285 million lari in the following year, according to the budget.

The administration also promised to increase state employee wages. Finance Minister Lasha Khutsishvili declared that the basic wage, which is used to compute the pay of the military, police, teachers, and other government personnel, will increase by 10% to 1,100 GEL.

The budget is anticipated to be approved by the end of December in Parliament, which is dominated by Prime Minister Garibashivili's Georgian Dream party.

Former pension fund director Surguladze slammed the budget, claiming that the government should spend money on job creation and infrastructure rather than wages, which would likely lead to even higher inflation.