Fitch confirms Georgia at 'BB' with negative outlook

  • Fitch says the negative outlook ‘reflects the significant ongoing impact of the coronavirus pandemic on Georgia's economy’. Photo: Nino Alavidze/, 13 Feb 2021 - 14:31, Tbilisi,Georgia

Global Fitch has confirmed Georgia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB’ with a negative outlook.

Fitch reported yesterday that the country’s ratings are supported by ‘strong structural indicators, such as governance and business environment’, relative to 'BB' category peers. 

It also said that ‘a consistent and credible policy framework underpins Georgia's relative resilience to shocks’. 

These credit strengths are balanced by a high share of foreign-currency denominated government debt, low external liquidity and higher external financing requirements relative to peers”, Fitch reported.

Meanwhile, the negative outlook ‘reflects the significant ongoing impact of the coronavirus pandemic on Georgia's economy’.

Fitch forecasts real GDP growth of 4.3% in 2021 and 5.8% in 2022, after a pandemic-driven contraction estimated at 6.1% in 2020. 

Georgia is currently in talks with the European Union for financial assistance for the next seven years. Photo: Nino Alavidze/

It also projects Georgia's economic recovery at a faster pace than the median growth rates of its 'BB' peers with 4.0% in 2021 and 3.7% in 2022. 

However, the main ‘downside risks’ to its baseline relate to ‘uncertainties attached to the evolution of the pandemic and the efficacy of the vaccination rollout’.

GDP growth will be predominately domestic demand driven, as easing of national restrictions supports private consumption, and higher than historical public infrastructure spending drives investment despite subdued private sector recovery”, the report reads.

It notes as well that net exports of goods ‘should benefit from increased demand from key trading partners’, while the recovery will remain ‘constrained by the tourism sector’ with expected revenues at 30% of 2019 levels in 2021, rising to 80% in 2022.

The prices of food, non-alcoholic beverages, transport and housing, water, electricity, gas and other fuels have increased in Georgia month-on-month, according to the latest inflation data. Photo: Nino Alavidze/

Fiscal policy will remain ‘accommodative in 2021, as authorities continue to provide targeted support for individuals and businesses affected by the pandemic’. 

This, Fitch says, includes ‘the continuation of income tax relief for businesses that retain low wage workers, the credit guarantee scheme for small and medium enterprises (SMEs), as well as social transfers for vulnerable households and the unemployed’.

Expecting the Georgian government to return to gradual fiscal consolidation from 2022,  Fitch forecasts narrowing of the deficit to 5.0% of GDP in 2022 'combined with stronger economic activity'.

The re-election of Georgian Dream (after parliamentary elections in October 2020) reinforces our expectation of economic policy continuity and we do not see this being disrupted, despite high political tensions given the current boycott of parliament by key opposition parties”, Fitch said.

The 10th convocation of the parliament of Georgia held its first session on Decenber 11 amid the opposition boycott. Photo: Nino Alavidze/

It then added that Georgia's governance and ease of doing business indicators ‘outperform the median percentile of its 'BB' peers, and commitment to the current International Monetary Fund Extended Fund Facility (EFF) programme helps maintain a positive structural reform agenda’. 

Therefore, Fitch expects Georgia ‘to agree a successor deal with the Fund when the EFF expires in April’.

Welcoming the report, Georgian Economy Minister Natia Turnava said earlier today that despite the global uncertainty and the coronavirus-related crises Fitch has kept Georgia’s rating unchanged, while a number of other countries in the region have their ratings decreased.