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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
Georgian oil company GOGC refinances $250mn eurobonds with EBRD loan
The European Bank for Reconstruction and Development (EBRD) is to extend a €217mn senior unsecured loan to state-owned Georgian Oil and Gas Corporation (GOGC) for the refinancing of a $250mn eurobond that matures in April 2021, the EBRD said in ​a statement​.
The funding agreement was made in response to the economic shock caused by the coronavirus (COVID-19) pandemic.
In addition, the financial package is to support planned reforms at the state company, including the development of a natural gas exchange.
The loan will improve the liquidity of GOGC, which has been damaged by the economic impact of the COVID-19 crisis, and will alleviate difficulties in tapping the capital market, the EBRD said.
The corporation is one of the largest state-owned companies.Its revenue increased by 37% to Georgian lari (GEL) 880.6mn ($330mn) in 2019. Net profit fell 22.8% to GEL121.4mn in the year. Despite declining profits, GOGC was still one of the most profitable state-owned enterprises in Georgia in 2019.
The total assets of GOGC include main gas pipelines, as well as the combined cycle power plants Gardabani 1 and Gardabani 2—the latter of which was officially put into operation at the end of 2019. The two power plants account for 20% of the country's electricity consumption and also provide balancing system services for intermittent production at hydropower plants.
It was in 2012 that GOGC issued a $250mn eurobond and listed it on the London Stock Exchange. In April 2016, it refinanced the eurobond, with a
45​ GEORGIA Country Report ​November 2020 ​ ​www.intellinews.com