Standard & Poor’s said that the sovereign credit ratings of the Georgian government in foreign and national currency were set at BB-/B with a stable forecast. The risk of transfer and conversion of currency of Georgia’s non-sovereign borrowers had a rating of BB.
Georgia has good prospects of economic growth, moderate level of growth of the governmental debt and stabilization of finances. Limited flexibility of the monetary policy and low GDP indicators were the negative factors.
The economic growth rate of Georgia dropped to 1.7% in Q1 2013, the lowest level since 2009. The rate was dropping in the second half of 2012 due to reduction of foreign investments and investments of the social sector. The share of real investments in the GDP growth dropped to 5.5% in 2012, compared with 8% two years earlier.
Post-electoral policy will continue having a negative impact until the second half of 2012. President Mikheil Saakashvili’s terms of office end in late autumn 2013.
Economic growth rate may improve in the second half of 2013 and will not exceed 10% seen earlier. Investments will total a little over 36% of the GDP. The real growth of the GDP per capita will drop to 3.5% in 2013 and to over 5% in 2013-2016.
Georgian financed the deficit of account of operations at 11.5% of the GDP in 2012 using euro bonds and foreign investments. Its governmental debt reached about 100% of the GDP in 2012 and will continue growing in 2013. About 70% of deficit was financed by foreign investments in 2000-2011. Foreign investments dropped to 3.8% of the GDP in 2012. Budget deficit dropped from 3.6% of the GDP in 2011 to 2.9% in 2012. Deficit will remain below 3% of the GDP. The budget deficit of the expanded government will increase to 3.5%.
Debts to private business and banks increased by 13% in 2012 (23% in 2011).
