Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for the Republic of Georgia (long-term local- and foreign-currency issuer and senior unsecured debt ratings of BB and Negative Outlook; short-term local- and foreign-currency issuer ratings of S-3 and Stable Outlook) on 24 June 2025.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

Georgia’s BB ratings are supported by: i) moderate levels of government debt and a strong government debt profile, ii) a solid medium-run economic growth potential, and iii) a strengthened macroeconomic-policy framework. Conversely, Georgia’s ratings are challenged by: i) domestic institutional risks as October-2024 parliamentary elections have further divided the nation; ii) sustained geopolitical risks after Russia’s escalation of war on Ukraine; iii) vulnerability to external shocks due to the small size of the economy (nominal GDP of an estimated USD 35bn in 2025) alongside the elevated reliance on external financing; and iv) financial-stability risks associated with the significant dollarisation of the economy.

Despite exceptionally high uncertainty, the economy has remained resilient. Real GDP growth stood at 9.3% in Q1 2025 and is projected to 7.5% in 2025, down from 9.4% in 2024, before moderating to 5.3% on average over 2026-30, in line with its medium-term potential. Even so, the domestic political crisis, geopolitical strains and global trade tensions could weigh on consumers and investors’ confidence, as well as net exports. Questions surrounding the independence of the central bank could also weigh on the monetary policy framework.

Moreover, the fiscal outlook remains strong. The general government deficit is projected at 2.3% of GDP in 2025, unchanged from 2024, and at 2.1% on average over 2026-30. High nominal growth and a historical commitment to fiscal prudence underpin the projected stabilisation of general government debt, around 35% of GDP by 2030, after 36.1% in 2024. Refinancing risks are further mitigated by a favorable debt profile. More than two-thirds of government debt is on concessional loan terms, supporting a comparatively long debt maturity and moderate interest-payment burden.

However, the outlook is clouded by institutional, geopolitical and external-sector risks. This reflects a weakening of democratic institutions, rises of civil instability, disputed parliamentary and presidential elections, increased sanctions risks, greater geopolitical sensitivities, and weakened official reserves (USD 4.6bn as of May 2025, against USD 5.4bn in August 2023). As Georgia is vulnerable to external crises due to the small size of the economy, elevated reliance on external financing and significant dollarisation, the curtailment of external-sector buffers decrease resilience. The current account deficit is projected to hover around 5% of GDP in the coming years, after 4.4% of GDP in 2024, while the suspension of the IMF programme and delay in EU accession talks until 2028 are expected to weigh on foreign investments.

Western sanctions against Georgia have to date been targeted and deliberately restrained, but the risk of further sanctions is high, and any severe escalation of sanctions and/or curtailment of access to Western financing can have direct effects on repayment risks. The evolution of the domestic political situation, associated policy response from Western countries, and geopolitical risks will be key to inform the rating trajectory.

The Negative Outlook represents the opinion that risks for the long-term ratings are skewed on the downside over the next 12 to 18 months.

Upside scenarios for the ratings and Outlooks are (individually or collectively):

1. Institutional and democratic weakening is reversed, civil and political instability moderates, and/or risks of further sanctions are curtailed;
    
2. Geopolitical and security risks are eased significantly;
    
3. External-sector risks are curtailed, such as reductions of structural current-account deficits and/or the re-accrual of foreign-exchange reserves.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. A weakening of democratic institutions and/or rise in civil instability undermines governability, elevating sanctions risks and/or increasing the risk of heightened political instability;
    
2. An escalation of geopolitical risks meaningfully elevates adverse long-run implications;
    
3. External vulnerabilities were to rise, resulting in significant adverse effects for reserve adequacy and/or for the repayment of the external debt;
    
4. The medium-run public-debt trajectory weakens, as an example, due to a looser commitment to budgetary discipline and/or weaker-than-foreseen nominal growth.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Thomas Gillet, Director
 
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