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Moody's sees low risk stemming from waste and pollution issues in Georgia

Business Materials 15 April 2021 15:45 (UTC +04:00)
Moody's sees low risk stemming from waste and pollution issues in Georgia

BAKU, Azerbaijan, April 15

Tamilla Mammadova – Trend:

Georgia has had significant success in building institutional capacity and economic reforms which have supported flexibility in labor and product markets, Trend reports via the Moody.

Moody assesses Georgia's exposure to environmental risks as "moderately negative" (E-3 issuer profile score), reflecting moderately negative risks related to physical climate change, notably heat stress, unsafe water issues and associated exposure to an agriculture sector.

Georgia's ESG credit impact score is Moderately Negative (CIS-3), balancing negative demographic and employment challenges and moderately negative environmental, largely physical climate, risks.

Moody sees low risk stemming from waste and pollution issues. In Moody's assessment, Georgia is highly exposed to social risks (S-4 issuer profile score) reflecting risks related to a moderately aging population, high rates of youth unemployment, low incomes and only modest spending on health and education, albeit life expectancy is relatively high.

Upward pressure on the rating could develop as a result of ongoing and effective reforms that sustainably raise domestic savings, including lifting public savings which helps curtail the fiscal deficit and reduce external vulnerability. Measures that bolster the resilience of the banking system further would also be credit positive.

"Economic reforms that foster greater economic diversification and higher productivity growth over time would raise Georgia's economic strength and potentially support the rating," the report said.

Downward pressure on the rating could develop from an increase in external vulnerability risks, notably a widening gap between domestic savings and investment, or an escalation of political risks. A sustained deterioration in fiscal metrics could also put downward pressure on the rating. This credit rating and any associated review or outlook has been assigned on an anticipated/subsequent basis.

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