Global ratings agency Moody’s upgrades Georgia’s credit rating

Georgia has advanced its position at a leading international credit rating agency.

Moody’s Investors Service upgraded the Government of Georgia's local and foreign currency issuer ratings to Ba2 from Ba3. The outlook remains at stable.

The rating upgrade and stable outlook are supported by Moody's view that the Georgian economy's resilience in the wake of the regional economic shock which began in 2014 demonstrates the increasing strength of the economy and its institutions.

Georgia's foreign currency senior unsecured ratings have also been upgraded to Ba2 from Ba3.

Georgia’s Deputy Economy Minister Nino Javakhadze assessed this change as a positive signal for international investors, making it easier for Georgia to attract international capital while helping local financial institutions to have access to the international financial resources.

In her words this was the first improvement of the rating since October 2010.

Georgia's economy has proved resilient to a significant economic, financial and exchange rate shock in the region in 2014-16. Georgia's GDP growth averaged 3.4 percent during this period, when many of its neighbors were in or close to recession. We attribute this resilience to effective macroeconomic policy management and strong banking supervision that allowed banks to continue to finance the economy,” said Moody’s.

Looking ahead we expect Georgia's economy to strengthen and its resilience to shocks to continue to be enhanced as ongoing measures to diversify and reform the economy bear fruit,” Moody’s statement reads.

Such measures include the ongoing process of diversification of trade and investment relationships, including through the Association Agreement (AA) and Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union (EU). As Moody’s explained, these agreements will provide Georgia with technical and financial support to further develop its already strong institutions and further deepen political and economic relations.

Closer ties and alignment with EU norms will also boost competitiveness through measures to improve customs procedures, food quality, education systems, and labor codes,” said Moody’s.

Beyond its relations with the EU, Moody’s also accented Georgia’s growing access to a diverse set of markets, through various recent and prospective trade agreements, such as those with a number of Commonwealth of Independent States members, Turkey, and potentially through the prospective free trade agreement with China.

This will help to maintain FDI levels at close to 10 percent of GDP and will likely increase exports and economic growth in the medium term. We also expect that past microeconomic reforms, which have helped to boost the economy's shock absorption capacity, will continue to positively affect the economy,” read the statement.