Page 51 - GEORptNov21

8.4 International ratings
Georgia - Rating agency
as of June 2021
Bond rating: Moody’s
Ba2 (Stable)
Bond rating: Fitch
BB (Negative)
Bond rating: S&P
BB (Negative)
S&P downgrades Georgia’s outlook to negative
S&P rating agency revised its outlook on Georgia to negative from stable, citing external balance issues and the volatile political situation impeding necessary reforms on February 26.
The negative outlook reflects risks to Georgia's ability to generate adequate foreign exchange earnings to service its sizeable external liabilities over the rating agency's forecast horizon, S&P said in its statement.
The rating would be lowered in case Georgia’s growth outlook deteriorates (which would endanger consolidation of the external and public deficits) or if the external gap’s financing further shifts to debt-generating rather than equity-based instruments.
“The recovery in the tourism sector is likely to lag the global rollout of vaccines, and we do not project a return to 2019 levels of tourist activity through 2024. Coupled with a more volatile domestic political and policy environment, this could cloud the medium-term outlook for foreign investment inflows — important for growth and external financing, in our view,” S&P analysts explained.
S&P projects Georgia's real GDP will grow by 4% in 2021 after contracting by 6% in 2020.
Economic activity, including in the beleaguered hospitality sector, will benefit from the relaxation of containment measures. Restrictions were reimposed after a sharp spike in COVID-19 cases in the last quarter of 2020. The continuation of some government support measures into 2021 should also support growth.
“While we think the opposition's demand for fresh elections is unlikely to be 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.
51 GEORGIA Country Report November 2021 www.intellinews.com