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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.
48 GEORGIA Country Report June 2020 www.intellinews.com
