Standard & Poor’s upgrades Georgia to 'BB' with stable outlook

Standard & Poor's (S&P) Global Ratings has raised its long-term foreign and local currency sovereign credit ratings on the Government of Georgia to 'BB' from ‘BB-’. It also affirmed the short-term ratings at 'B'. The outlook is stable.

Georgia has maintained comparatively high growth rates over the past few years, even in a challenging external environment”, S&P reported.

It said, the economy expanded by nearly 4% on average over 2015-2018 in Georgia, “weathering periods of anaemic external demand as trading partners were hit by falling oil prices, regional currencies were devalued, and some fell into recession”.

This resilience partly reflects the economy's success in attracting funds from abroad to finance its investment needs and its external deficits”, it noted.

S&P also stated that Georgia's economy grew by nearly 5% in real terms in the first half of the year. 

Incorporating a slight slowdown in the second half - lower tourism revenues and muted consumption following the lari's depreciation - we project real GDP growth of 4.5% in 2019. We have revised up this estimate from our previous 4% for the full year", S&P said.

It further noted that Georgia "remains a small, open economy with a narrow export base and a significant net external liability position built on persistent past current account deficits". 

In our view, Georgia's institutional settings remain favourable in the context of the region, with several established precedents regarding power transfer, and a degree of checks and balances between various government bodies”, S&P announced.

It underscored that the National Bank of Georgia has "broad operational independence". S&P does not expect "significant changes to these institutional arrangements over our four-year forecast".

S&P also considers that “political uncertainty will likely stay elevated in the run-up to the parliamentary elections in 2020”, but it does not expect “any detrimental shifts to economic policymaking and anticipate a continued broad focus on reforms and attracting foreign investment”.

• Read Standard & Poor’s full report for more detailed information.

Georgian Finance Minister Ivane Machavariani welcomed the increased S&P rating on Georgia. At a special news briefing earlier today he said the country needs just a couple of more upgrades to reach the rating which would "substantially change" the Georgian economy and its development.