Standard & Poor's Ratings Services had raised its long-term foreign and local currency sovereign credit ratings on the Government of Georgia to 'B+' from 'B'. The short-term ratings were affirmed at 'B'. The outlook is stable. The transfer and convertibility assessment was also raised to 'BB' from 'BB-', and the foreign currency recovery rating remains '4'.
"The upgrade reflects our view of Georgia's relative strength compared to its 'B' rated peers in terms of economic structure and growth prospects," Standard & Poor's credit analyst Trevor Cullinan said. "In our opinion, the government's focus on market-oriented reforms is likely to improve economic and fiscal indicators over the medium term," as reported by http://en.trend.az.
From 2006 until the brief but intense war with Russia in August 2008 and the onset of the global financial crisis, Georgia attracted significant foreign direct investment (FDI).
"We believe that Georgia's relatively low tax and business-friendly regime should continue to enable it to attract investment, and to leverage off its geographic position as an important transit route between Europe and Asia. We expect GDP per capita to continue to rise faster than in most peers over the medium term," the Standard & Poor's statement says.
The stable outlook reflects our expectation that the economy will expand over the medium term, further supporting Georgia's relative position in comparison with the 'B' rated peer group.
"We do not expect FDI to regain its peak of nearly €2 billion, but we anticipate it will be sufficient to fuel relatively strong growth, and to fund to a large extent the sizeable external imbalance. Substantial donor aid should also continue to benefit both the public and external finances," the statement says.
The Georgian governmental officials claim that granting Georgia with "B+" is an important event that will also increase trust of potential investors towards Georgia.
