Fitch’s report predicts the long-lasting growth of the Georgian Economy. According to the report, the nation’s budgetary targets are better than expected, and budget mobilization has increased.
The statement states that it is expected that fiscal conditions will be supported in the medium term, with the budget deficit being below 3% and the debt level staying under 38%.
Fitch’s report notes that, despite the challenges, the country is still experiencing solid economic growth. According to their estimation, in the medium term, the GDP will again have a positive growth rate and it will stabilize within 5%.
Despite the higher dollarization of the monetary sector, monetary policy is still effective, as shown by the recent low inflation. Fitch forecasts mid-term inflation will still target below 3% and settle within 2%.
The credit agency, considering various factors, changed the perspective from stable to negative. The change in perspective of rating – largely caused by the tensions and current background created by ongoing political processes. According to the report, the reduction of domestic political risk will still have a positive impact on the country’s sovereign rating.
It’s worth noting that Fitch’s sovereign rating criteria assess a country’s creditworthiness based on factors such as economic growth, fiscal discipline, and external finances.
Important points from Fitch’s Reports
- Fiscal Discipline: Fitch expects that the nation will continue to exercise fiscal restraint over the medium run, with a budget deficit of less than 3% and a debt level of no more than 38%.
- Economic Growth: According to the credit agency, the GDP will rise at a positive pace and stabilize in the medium run at 5%.
- Inflation: According to Fitch, mid-term inflation will stay below 3% and hover around 2%.
- Monetary Policy: As evidenced by the current low inflation, monetary policy remains effective even in the face of increased dollarization of the monetary system.
- Political Risks: Because of persistent political risks and tensions, Fitch revised its outlook from stable to negative.
- Rating Sensitivities: According to Fitch, the nation’s sovereign rating will improve if internal political risk is decreased.
- BB Rating: Fitch’s BB rating indicates that the country has a moderate credit risk, with a relatively stable economy and adequate fiscal management.
