Scope Ratings reviews its ratings either yearly, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remains proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for Georgia (BB/Negative; S-3/Stable) on 17 March 2021. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Georgia’s BB credit ratings are underpinned by i) a credible macroeconomic policy framework and track record of fiscal prudence supported by effective engagement with the IMF – Scope expects Georgia to maintain a constructive relationship with the IMF after conclusion of the current Extended Fund Facility; and ii) stronger performance on governance and with respect to the business environment as compared with Georgia’s sovereign peers, underpinning continued investment and FDI inflow to the economy.

The Negative Outlook reflects an ongoing impact of the Covid-19 crisis on Georgia’s small and open economy as well as the nation’s public finances. Georgia’s vulnerability to adverse global conditions is underscored by a high economic dependence on the tourism sector, which is expected to recovery only over time, alongside structural current-account deficits and elevated external financing needs. In addition, a high share of public- and private-sector borrowing denominated in foreign currency constitutes a significant risk for financial stability as well as public-debt sustainability. Debt refinancing risks are mitigated by Georgia’s track record of sound access to concessional loan financing, which help anchor fiscal and foreign-exchange reserves and have resulted in a favourable government-debt profile made up of significant share via concessional multilateral loans.

While Scope does not expect present political instability to disrupt the continuity of the government’s main policy directions, including a continued commitment to economic integration with the European Union, it, nonetheless, does risk further delays in important structural reform. Scope expects geopolitical risk to, moreover, persist in relation to unresolved conflicts in South Ossetia and Abkhazia, although some progress towards re-opening regional transport networks is possible.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Levon Kameryan, Analyst

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