Fitch affirms Georgia at BB credit rating with “Positive Outlook”
Fitch Ratings, a global credit rating agency, has affirmed Georgia’s Long-Term Foreign-Currency Issuer Default Rating status at ‘BB’ rating, also maintaining the assessment of the financial outlook for the country’s financial developments as “positive,” Azernews reports, citing Anadolu Agency.
The international agency noted the rating was supported by Georgia’s “strong governance” and economic development indicators relative to the 'BB' medians, including “credible macroeconomic and fiscal policy framework”, “moderate level” of public debt and “sound banking sector”.
Georgia’s “solid” economic growth prospects were also highlighted in the report, noting that the arrival of migrants had a “positive spillover” on economic activity and estimating economic growth of 5 percent in 2024 and 5.1 percent in 2025.
itch expects the budget deficit to decline from an estimated 2.5 percent of GDP in 2023 to 2.4 percent in 2024 and 2.3 percent in 2025. The report also said the fall in inflation to 0.4 percent at the end of 2023 was “driven by strong base effects and a robust lari”.
The Government debt is expected to remain around 38 percent of GDP in 2024-2025, the agency emphasised, noting lari depreciation “poses the greatest risk to debt dynamics”, however, the risk “is mitigated” by a majority of “external debt” sourced from bilateral and multilateral donors.
Obtaining the European Union membership candidate status by Georgia in December 2023 was also highlighted in the report, which said “the geopolitical risks with Russia remain high”, in the context of “international scrutiny with regard to sanctions enforcement”, and Georgia's aspirations to join NATO and the EU.
Additionally, the report touched on the “governance risks”, citing changes to the central bank law and political tensions in the country. The ruling Georgian Dream party is “anticipated to maintain its economic policy stance by the October 2024 parliamentary elections”, it added.
The suspension of Georgia's IMF Stand-By Agreement in September 2023, “amid concerns over institutional independence raised by the central bank law”, was also mentioned by Fitch, saying the changes to the central bank law “undermine the independence of the central bank and complicates the sanctions enforcement regime for banks”.
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