Fitch Affirms Georgia at 'BB', Outlook Negative

Fitch Ratings has affirmed Georgia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB'. The Outlook is Negative. President of the National Bank Koba Gvenetadze has responded to the above information via social network.

According to the report, the National Bank of Georgia's (NBG) track record of credible policy making has been important in preserving macroeconomic and financial stability, and limiting balance of payments risks in previous economic shocks as well as the current global pandemic.

“A mix of macro-prudential measures and interventions in the foreign exchange market have supported financial stability and smoothed exchange rate volatility. Georgia's economy is highly dollarised, small and highly open (trade openness is 60.9% of GDP, well above the 46.5% median of 'BB' peers). However, a credible policy framework has kept both Georgia's CPI and REER volatility indicators below the historical median volatility of 'BB' peers since 2012”, reads the report.

According to the document, Georgia's Negative Outlook reflects the significant ongoing impact of the coronavirus pandemic on Georgia's economy. The pandemic is causing a sharp contraction of Georgia's small open economy with a large tourism sector, a marked deterioration in fiscal accounts, including higher government debt, and increased vulnerabilities stemming from Georgia's higher external debt and wider structural current account deficit relative to the median of its 'BB' category peers.