Fitch, a global credit rating agency affirmed Georgia at ‘BB’ rating, with a negative outlook, as the COVID-19 pandemic is “causing a sharp contraction” of the country’s “small open economy with a large tourism sector.”
The rating agency said on February 12 that Georgia’s “consistent and credible policy framework” is offset by a high share of foreign-currency government debt, as well as low external liquidity and higher external financing requirements.
Moreover, Fitch said it expects the Georgian Government to begin fiscal consolidation from 2022, as the country’s public debt increased by 20 percentage points from 2019 to 2020, reaching 60.4% of the GDP.
The global rating agency said it forecasts the Georgian economy to grow 4.3% in 2021 and 5.8% in 2022, constrained by a slow recovery in the tourism sector.
“We expect [tourism] revenues at 30% of 2019 levels in 2021, rising to 80% in 2022,” Fitch said.
Georgia maintained the same rating and with a negative outlook for the second time, after the credit rating agency initially revised the outlook from stable to negative in April 2020, in the wake of the COVID-19 outbreak and related economic downturn.
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