Page 35 - GEORptAug18

8.4 International ratings
Georgia - Rating agency
as of May 2018
Bond rating: Moody’s
Ba2 (Stable)
Bond rating: Fitch
BB- (Positive)
Bond rating: S&P
BB- (Stable)
S&P affirms Georgia’s BB-/B saying growth set to remain strong
Fitch upgrades Georgia outlook to ‘positive’ says economy ministry
S&P Global Ratings on May 4 affirmed the ‘BB-/B’ ratings of Georgia and said the outlook was stable. Georgia's growth is set to remain strong and its IMF programme should mitigate balance of payment risks and act as a fiscal policy anchor, the rating agency said.
The update refers to the country's long and short-term foreign and local currency sovereign credit ratings.
Preliminary data showed GDP accelerated through the first quarter of this year, rising from 4.4% in January and 5.5% in February, to average at 5.2% y/y for the quarter. The expansion in March was driven by a rise in activity in manufacturing, transport, real estate and trade, and “other community, social and personal service activities”.
The statistics office also released preliminary data on Georgia’s external trade, showing that exports were up 28.4% to $740.3mn, while imports rose 21.6% to $2.0834bn.
Fitch Ratings has upgraded Georgia's outlook from 'stable' to 'positive', while reaffirming the country's sovereign rating at 'BB-', the Georgian economy ministry announced in a statement on March 19. The ratings agency has yet to publish a report on the upgrade.
According to the ministry's statement, the "revision of the outlook to positive reflects the key rating drivers such as maintaining a stable macroeconomic environment, showing resistance to shocks and ensuring a favourable business environment". Georgia’s growth prospects compare favourably in the ‘BB’-rated peer group, where the median five-year average growth is estimated at 3.5%. Under Fitch’s latest projections, Georgia is set to achieve real GDP growth of 4.6% in 2018 and 4.9% in 2019".
However, Fitch has warned repeatedly about Georgia's foreign debt, which accounted for 66% of GDP in mid-2017 and which comprises primarily (84%) of concessional and multilateral loans that are denominated in foreign currencies, exposing the government to exchange rate volatility.
Furthermore, the country's current account deficit stood at 13.5% of GDP in 2016, up from 12% in 2015, driven by a worsening of the primary income deficit. Lastly, Georgia's foreign exchange reserves are relatively low, covering only three months of imports.
35 GEORGIA Country Report August 2018 www.intellinews.com