Forecast: Georgia's net debt to decline
Baku, Azerbaijan, October 17
By Tamilla Mammadova – Trend:
The growth rate of Georgia’s net debt will slow down and the expanded government’s net debt will reach a maximum of 43 percent of GDP in 2021, Trend reports citing S&P Global Ratings.
In fact, with the exception of capital expenditures, the current government budget is constantly characterized by a surplus.
The debt structure is also favorable, since its bulk is liabilities to international financial institutions with an average maturity of about eight years, while the weighted average interest rate is just over three percent.
During 2019, inflation was more than four percent due to increased excise taxes on tobacco products; at the same time, the core inflation rate remained rather low. Moreover, the depreciation of the lari also influenced the rate of inflation, the report said.
According to S&P, the effectiveness of monetary policy in Georgia is relatively high in the regional context.
“We believe that starting from 2020, the National Bank of Georgia will be able to maintain this indicator at the target level of three percent, ” the agency noted.
Thanks to the floating exchange rate regime, Georgia promptly adapted to changing external conditions, and also avoided the possible negative consequences of sharp fluctuations in the real effective exchange rate, according to S&P.