Page 45 - GEORptMar21

Fitch affirms Georgia’s BB/negative rating, expects more structural reforms
met, there is room for other political concessions that could end the deadlock. Former prime minister Giorgi Gakharia's recent resignation over the sentencing of an opposition leader further clouds near-term policy predictability, though the government's stated macroeconomic agenda remains unchanged,” the rating agency noted on the political side.
The move takes into account the effects of the coronacrisis and follows a similar step taken by Fitch last April.
The rating agency affirmed the country’s long- and short-term foreign and local currency sovereign credit ratings at BB, as well as the negative outlook.
Georgia's governance and ease of doing business indicators outperformed the median percentile of its BB peers, the rating agency argued, while the country's commitment to the current IMF EFF programme helped maintain a positive structural reform agenda.
Fitch expected Georgia to agree a successor deal with the Fund when the EFF expires in April.
The main downside risks to Fitch's baseline related to uncertainties attached to the evolution of the pandemic and the efficacy of the vaccination rollout, the rating agency said.
Georgia's general government debt is estimated by Fitch to have increased by 20pp in 2020 to 60.4% of GDP, slightly above the median debt ratio of 'BB' peers (59.9% of GDP). Fitch forecast debt to stay around this level in 2021, before declining to 56.5% in 2022.
The economic recovery and commitment by the government to return to its fiscal rule by reaching a deficit below 3.0% of GDP by 2024, will support medium-term debt reduction.
Fitch forecast Georgia's CAD will widen to 12.5% of GDP in 2021, before narrowing to 7.9% in 2022. A domestic-driven recovery and a weak outlook for tourism will mean a higher pace of growth in imports than exports, it added.
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
45 GEORGIA Country Report March 2021 www.intellinews.com