The FINANCIAL — Despite the COVID-19 pandemic and the global economic crisis that is in the world, two very influential rating companies, Fitch and S&P, have left Georgia’s sovereign rating, perspective and outlook unchanged at BB level. According to the report of the international rating agency S&P, the retention of economic stability despite external challenges was deemed a strong point of Georgia’s sovereign credit rating. The fact that Georgia’s perspective and credit rating remained the same considering that the ratings of a number of countries have deteriorated, clearly indicates confidence in Georgia’s economic policy.
According to Ministry of Economy and Sustainable Development, the report was published taking into consideration the negative effects of pandemic on Georgian economy. Based on the report, S&P’s considers it possible to increase Georgia’s credit rating if economic growth is reflected in higher income levels and the country’s exports become more diversified, both in terms of products and geography, as reported by Georgian Public Broadcasting.
S&P considers institutional strength to be a significant advantage of the Georgian economy. The rating company gave a positive assessment to the following efforts by the government: Measures to reduce dollarization, pension reform, deposit insurance, capital market development, and other reforms carried out by the authorities. In the report, S&P notes that the economic reforms by the Government of Georgia that are focused on long-term economic growth include the following: The implementation of infrastructure projects, the further improvement of the business environment, and the reform of education and state-owned enterprises. The report states that the pace and strength of economic recovery indicates the government’s ability to ensure the reduction of the debt-to-GDP ratio.
The rating agency Fitch also published its ratings this month. Despite global challenges, Georgia’s sovereign credit rating and outlook remained unchanged. Fitch’s position clearly reflects the rating company’s positive assessment of our country’s economic policy, business environment, institutional strength, and quality of governance. The organization believes that the measures implemented by the government within the framework of the Anti-Crisis Plan will be one of the main sources for the improvement of demand and the recovery of economic activity. According to the rating company’s assessment, a reliable and consistent economic policy framework during the crisis has contributed to the stability of the Georgian economy, the retention of macroeconomic stability, and the reduction of the risks of the current account deficit. Maintaining an unchanged sovereign rating is a positive factor that significantly strengthens international institutions’ confidence in Georgia and has a positive impact on Georgia’s investment climate.
S&P reported on August 28 that ‘the coronavirus pandemic has pressured Georgia’s economic, external, and fiscal metrics by hitting tourism, remittances and foreign direct investment inflows, however they also said that financing secured by the authorities from international financial institutions will mitigate lost foreign exchange revenues, while covering Georgia’s larger twin fiscal and external deficits and that the ratings on Georgia are constrained by low income levels, as well as by balance-of-payments vulnerabilities, including its import dependence and sizeable external liabilities. S&P also noted in its report that the ratings are supported by Georgia’s relatively strong institutional arrangements when compared regionally; its floating exchange rate regime; and the availability of timely, concessional financing from IFIs under extenuating circumstances. ‘Policymakers’ efforts to widen Georgia’s economic base, diversify its export geography and foreign investment, and develop its infrastructure are likely to maintain strong economic growth while gradually reducing external imbalances in the medium term’, – S&P added, as reported by Agenda.ge
“The international rating company S & P’s leaving Georgia’s sovereign credit rating at BB level and the outlook unchanged is an indicator that despite the global challenges and the difficult situation in the region, the Georgian economy is good for investors,” Natia Turnava told Minister of Economy and Sustainable Development. According to the Minister, the S&P reviewed and left Georgia’s sovereign rating unchanged, while the sovereign credit ratings of several countries, including Serbia, Bulgaria, Greece and several others, deteriorated during the year due to the global pandemic challenge is an indicator for investors that we have very low, manageable risks and the Georgian economy is solvent. This is an important fact that proves once again that the economic policies pursued by our team are correct, effective and balanced. Balanced means that we have found the right golden interval between anti-pandemic restrictive measures and economic support measures, which is quite difficult but has worked out well for us. Therefore, the prospects are positive, “- said Natia Turnava.
It is also interesting to note that The World Bank has published a new Enterprise Surveys, where Georgia was in the top 10 countries in terms of low bribery prevalence. Over 164,000 of companies from 144 countries were involved in these surveys. In Georgia, the percent of firms that said they would expect to have to give a ‘gift’ in order to receive an operating license amounted to zero. The percent of firms that said they would expect to give ‘gifts’ during meetings amounted to 1 per cent and the percent of firms expecting to have to give gifts in order to secure government contracts amounted to 1.4 per cent.
