BAKU, Azerbaijan, Feb. 14
By Tamilla Mamedova - Trend:
Government deposits of Georgia reached 9.4 percent of GDP at the end of 2020, up from 4.7 percent in 2019, due to over financing from official creditors to create a buffer, Trend reports via the Fitch.
As reported, 2021 budget financing needs should be comfortably met partly by drawing down donor pledges and government deposits. Plans to refinance an upcoming Eurobond maturing in April ($500 million) will help maintain foreign exchange reserves.
Georgia's general government debt is estimated by Fitch to have increased by 20 pp in 2020 to 60.4 percent of GDP, slightly above the median debt ratio of 'BB' peers (59.9 percent of GDP).
"We forecast debt to stay around this level in 2021, before declining to 56.5 percent in 2022. The elevated debt level, largely in official debt, has also meant a deterioration in Georgia's negative sovereign net asset position, to 24.4 percent of GDP in 2020 from 15.1 percent in 2019," the report said.
The economic recovery and commitment by the government to return to its fiscal rule by reaching a deficit below 3 percent of GDP by 2024, will support medium-term debt reduction. Georgia's prudent fiscal record coming into the pandemic and continued engagement with the IMF (currently through an Extended Fund Facility; EFF) means Fitch expects the authorities will adopt policies in fiscal consolidation once the pandemic subsides.
Debt sustainability is underpinned by a large share of multi and bilateral debt (approximately 72 percent of total debt) with long average maturities and low interest costs. However, a large share of foreign-currency debt (74.8 percent of total debt) leaves the sovereign exposed to exchange rate risk.
Contingent liabilities remain a fiscal risk. Upcoming gross financing requirements of state-owned enterprises (SOEs) equal around 18 percent of GDP over 2020-2022. Authorities have made good progress improving the transparency of fiscal risks from SOEs, and aim at further reform of the sector.
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