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Moody's changes outlook on Georgia from stable to positive

By Gvantsa Gabekhadze
Wednesday, August 27
Moody's Investors Service has changed the outlook on Georgia's Ba3 sovereign rating from stable to positive. Concurrently, Moody's has affirmed Georgia's Ba3 rating.

“The key driver of today's outlook change is the entering into force of Georgia's Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, which Moody's expects will attract further foreign direct investment (FDI) and bolster the country's export performance. This should in turn support an improvement in Georgia's external position over the medium term,” the company statement reads.

The affirmation of the Ba3 rating reflects the combination of external vulnerability and geopolitical risks in the near term, as well as the volatile nature of the Georgian economy.

Minister of Economy Giorgi Kvirikashvili assessed this change as "very positive for the state.” He stressed that the change would make it easier for companies to attract credit resources.

"This refers both to financial institutions and those companies who have direct credit relations with international partners,” the minister said.

Deputy Head of the Economic Council Giorgi Kavelashvili admits that the promotion was due to the signing of the Associating Agreement with the EU.

“Through the agreement, the European market will be opened for Georgian entrepreneurs; the export rate will be raised and there will be a flow of investment into the country.

Economic analysts stress that the Moody’s is a very important international rating organization and its recent rating of Georgia points at a stable economic-political situation in the country.

“When there are various confrontations in the region, the rating shows that there is a stable situation in the country that will attract investors,” economic analyst Irakli Lekvinadze says.

“Local and state organizations will have more access to international capital,” Lekvinadze added.

Fellow analyst Giorgi Kalandadze suggested that such outcomes are opportunities for Georgia to be oriented on development.

“However, the correct economic approach and the responsibility of state officials is required for achieving such a development,” Kalandadze said.

The analysts claim that the rating will not have an abrupt positive influence on Georgian’s current socioeconomic situation. However, they state that in the long-term perspective, such ratings would encourage more investors in the country and the process will create jobs.