Georgia, Tbilisi, Nov.23/ Trend, N. Kirtskhalia /
Standard & Poor's Ratings Services raised its long-term foreign- and local-currency ratings on the Government of Georgia to 'BB-' from 'B+', Georgia's President Mikheil Saakashvili said on Tuesday at a government session in Kutaisi.
He said the Agency raised rating on two countries. "They are Georgia and Kazakhstan, which has oil. And it the Agency which caused the U.S. and other leading countries' indignation with its negative forecasts on their economy," Saakashvili underlined.
At the same time, the short-term foreign- and local-currency ratings were affirmed at 'B'. The outlook on the ratings is stable. The recovery rating is '4'. The transfer and convertibility (T&C) assessment is 'BB'.
Saakashvili stressed that the upgrade reflects the country's view of Georgia's strong growth prospects and improving public finances. These strengths are underpinned by its commitment to market-oriented policies and its previous structural reforms and fiscal consolidation.
The upgrade also reflects S&P experts' view of an important stabilization in Georgia's geopolitical and domestic political environments.
The ratings on Georgia are constrained by external vulnerabilities stemming
from its large net external liability position, limited monetary flexibility
due to high dollarization, and low GDP per capita. Political risk does remain
a constraint on the ratings, although in S&P view this continues to ease.
The stable outlook reflects Georgia's external vulnerabilities against its more-stable political environment, relatively strong economic growth prospects, and improving government finances.
Raising of he ratings would be considered if energy and tourism exports, or foreign investment inflows, significantly reduce Georgia's external vulnerabilities. A further strengthening of political institutions, including a longer track record and a successful transition to a new government and a new president following elections in 2012 and 2013 could also support the ratings. Conversely, the ratings could come under downward pressure if, possibly due a deterioration in the regional or domestic political environment, the external imbalances or general government deficit were to widen significantly.