On November 28, 2013, Standard & Poor’s (S&P) rating agency affirmed Georgia’s sovereign credit ratings at BB- and B for long- and short-term, respectively. The outlook remains “Stable”. According to S&P, the two democratic and peaceful transfers of power over the last year boded well for medium-term political stability and strengthening of institutional effectiveness. As key constraints to the rating, S&P named high external vulnerabilities, limited monetary flexibility and low GDP per capita. However, according to the rating agency, these were in turn offset by strong economic growth prospects, moderate levels of government debt and stabilizing government finances. The agency anticipates the following key developments in the near term:
– Net exports to make a substantial positive contribution to GDP growth in 2013 on the back of an increase in commodity exports and tourism receipts while real GDP growth to recover in 2014.
– A break in the recent fiscal consolidation trend in the near-term as government ramps up social expenditures, resulting in the deficit widening to 3.9% of GDP in 2014.
– Credit growth to accelerate after the political environment stabilizes.
