Page 46 - GEORptFeb21

‘BB’
coronavirus (COVID-19) pandemic on the country.
“This significant shock will lead to a sharp contraction of Georgia's small and open economy with a high dependence on tourism, deterioration in fiscal accounts including markedly higher public debt and increased risk stemming from Georgia's higher external debt and wider structural current account deficit relative to the median of its BB category peers,” Fitch commented.
Georgia’s GDP growth is forecast by Fitch to contract by 4.8% in 2020. The rating agency also projects that GDP growth will partially recover in 2021 to 4.3%, supported by a rebound in external demand, a revival of private consumption, employment growth and a recovery in investment.
“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
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
46​ GEORGIA Country Report​ February 2021 ​ ​www.intellinews.com