Fitch Ratings Revises Georgia's Outlook to Stable, Affirms at 'BB'
Fitch Ratings, a leading provider of credit ratings, commentary and research for global capital markets, affirmed Georgia’s sovereign credit rating at BB level with stable outlook on June 21.
Strong GDP Growth: The large influx of Russian, Ukrainian and Belarusian migrants has resulted in a lasting value addition to the economy, including by boosting potential growth rates, notably in the ICT, construction, and hospitality sectors. Fitch expects growth to remain robust, at 5.8% in 2024 and an average of 5% in 2025-26, driven by domestic consumption and private and public sector investment.
Solid Budget Performance Record: Georgia has a strong record of overperforming versus budget targets, owing to stronger than projected revenue collection as well as capex under-execution. Fitch expects the general government deficit to narrow from 2.5% of GDP in 2023 and 2024 to 2.1% in 2025, well below the 3% deficit ceiling.
Moderate Government Debt Levels: General government debt (GGD) was 39.1% of GDP at end-2023, well below the current ‘BB’ median of 54%. The proportion of domestic debt has been increasing steadily to 28% of the total as of 1Q24 from 20% in 2021, in line with the authorities’ strategy to gradually raise this to 35%. Fitch projects GGD/GDP to remain broadly stable at 41% of GDP in 2024-26 (well below the 60% debt ceiling), with exchange rate depreciation the largest risk to debt dynamics. About 90% of external debt is owed to bilateral and multilateral creditors on concessional terms.
Increased Political Risk: The introduction and final passage of a ‘foreign influence transparency’ law in May 2024 has led to increased political uncertainty, reflected in large-scale protests. Political tensions could intensify further in the run-up to parliamentary elections scheduled for October 2024. In Fitch’s view, growing polarisation in society and weakened trust in public institutions will likely negatively affect Georgia’s governance indicators, a long-standing strength relative to peers. The passage of the law has also sharply worsened relations with the EU and the US and could delay the EU accession process.
Read the full report at https://www.fitchratings.com
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Fitch Ratings Revises Georgia's Outlook to Stable, Affirms at 'BB'
Fitch Ratings, a leading provider of credit ratings, commentary and research for global capital markets, affirmed Georgia’s sovereign credit rating at BB level with stable outlook on June 21.
Strong GDP Growth: The large influx of Russian, Ukrainian and Belarusian migrants has resulted in a lasting value addition to the economy, including by boosting potential growth rates, notably in the ICT, construction, and hospitality sectors. Fitch expects growth to remain robust, at 5.8% in 2024 and an average of 5% in 2025-26, driven by domestic consumption and private and public sector investment.
Solid Budget Performance Record: Georgia has a strong record of overperforming versus budget targets, owing to stronger than projected revenue collection as well as capex under-execution. Fitch expects the general government deficit to narrow from 2.5% of GDP in 2023 and 2024 to 2.1% in 2025, well below the 3% deficit ceiling.
Moderate Government Debt Levels: General government debt (GGD) was 39.1% of GDP at end-2023, well below the current ‘BB’ median of 54%. The proportion of domestic debt has been increasing steadily to 28% of the total as of 1Q24 from 20% in 2021, in line with the authorities’ strategy to gradually raise this to 35%. Fitch projects GGD/GDP to remain broadly stable at 41% of GDP in 2024-26 (well below the 60% debt ceiling), with exchange rate depreciation the largest risk to debt dynamics. About 90% of external debt is owed to bilateral and multilateral creditors on concessional terms.
Increased Political Risk: The introduction and final passage of a ‘foreign influence transparency’ law in May 2024 has led to increased political uncertainty, reflected in large-scale protests. Political tensions could intensify further in the run-up to parliamentary elections scheduled for October 2024. In Fitch’s view, growing polarisation in society and weakened trust in public institutions will likely negatively affect Georgia’s governance indicators, a long-standing strength relative to peers. The passage of the law has also sharply worsened relations with the EU and the US and could delay the EU accession process.
Read the full report at https://www.fitchratings.com
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