Page 44 - GEORptJul20

“However, there are material downside risks to our forecasts given the uncertainty around the extent and duration of the coronavirus outbreak,” Fitch said.
Fitch forecast that the general government deficit would rise to 8.6% of GDP in 2020, from a deficit of 2.0% in 2019, reflecting the government's fiscal support measures, automatic stabilisers and the impact on revenue of the contraction in the economy.
Georgia's announced fiscal package in response to COVID-19 amounted to Georgian lari (GEL) 2bn (approximately 4.0% of GDP) as of April 23, Fitch’s report said. However, the government unveiled on April 24 a bigger, GEL3.5bn ($1.1 bn, 7% of GDP) anti-crisis package. Out of this, nonetheless, at least GEL1.1bn will be loans extended to banks (as opposed to expenditures).
Fitch expected that Georgia's fiscal deficit should narrow towards 5.0% of GDP in 2021 due to the fading of one-off expenditure and recovery in economic growth.
General government debt is projected to increase significantly, from 39.8% at end-2019 to 59.4% of GDP in 2020, before declining moderately to 56.3% in 2021, according to the forecast of Fitch.
Fitch expected the global economy to go through a deep but short-lived recession in 2020 due to the pandemic. In particular, eurozone GDP was expected to fall by 7.0% in 2020, followed by 4.3% growth in 2021. The rating agency noted “an unusually high level of uncertainty around these forecasts with the risks firmly to the downside.”
8.5 ​Fixed income
8.5.1​ ​Fixed income - bond news
Georgia’s state energy company defers eurobond issue
Georgia's state-owned Oil and Gas Corporation (GOGC) has postponed a planned eurobond issue due to unfavourable market conditions amid the coronavirus (COVID-19) crisis, a senior company official said on April 14.
GOGC said in November that it planned to issue eurobonds worth €300mn on the London Stock Exchange in April.
"We have decided to move our plans and postpone the issue until a more favourable period," Omar Ogbaidze, GOGC’s chief financial officer, told Reuters.
GOGC issued a 5-year eurobond worth $250mn on the London Stock Exchange in 2016 to refinance a previous same-sized issue of 2012. JPMorgan acted as bookrunner for the 2016 issue.
The company planned to use the proceeds of the new Eurobond to refinance a previous issue maturing in 2021 and also to finance construction of a third power plant, in Gardabani. The plant's cost is estimated at $180mn.
44​ GEORGIA Country Report ​July 2020 ​ ​www.intellinews.com