S&P upgrades Georgia’s credit ratings

US-based international credit ratings agency Standard & Poor’s (S&P) has upgraded Georgia’s long-term foreign and local currency sovereign credit ratings to “BB” from the current “BB-” level with a stable economic outlook, reaffirming the short term ratings, the Georgian press has reported.

According to the ratings agency, Georgia has managed to maintain its “comparatively high growth rates” during the last few years, even in the face of a challenging external economic environment resulting from Russia’s ban on flights to and from Georgia over political disputes.

“This resilience partly reflects the economy’s success in attracting funds from abroad to finance its investment needs and its external deficits,” said S&P in a statement.

Despite a slight economic slowdown during the first half of the year due to lower tourism revenues, the agency revised its GDP projection for Georgia and now expects a 4.5 per cent growth rate for 2019 instead of the previous four per cent.

The S&P forecast also states that the Georgian economy will continue to grow by at least four per cent between 2019 and 2022.

“The domestic political landscape in Georgia has also seen heightened volatility recently with several public protests in both 2018 and 2019. We consider that political uncertainty will likely stay elevated in the run-up to the parliamentary elections in 2020,” the ratings agency’s analysts said, however, they noted that they did not expect “any detrimental shifts” to neither economic policy-making nor the government’s reform agenda to attract foreign investment.

At the same time, S&P expects some “downside risks” if the ruling Georgian Dream party starts to pursue policies aimed at solidifying their political power.