Azerbaijan, Baku, Dec. 21 / Trend E. Kosolapova/
Georgia's new government is likely to maintain prudent fiscal and economic policies, despite potential political risks, Fitch Ratings believes.
The agency affirmed Georgia's sovereign foreign currency Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook on 12 December 2012.
Parliamentary elections in October 2012 led to a surprise victory for the opposition Georgian Dream coalition after ten years of dominance by President Mikheil Saakashvili and the United National Movement (UNM).
Fitch expects Georgia to navigate political risks during cohabitation between newly-appointed Prime Minister Bidzina Ivanishvili and President Saakashvili, whose UNM party is now in opposition.
"This will last until October 2013, when a new president will be elected and constitutional amendments take effect, shifting powers to the prime minister," Fitch said.
According to Fitch, provided a slowdown in investment associated with the election is overcome, the economy should continue to grow strongly in 2013. The draft 2013 budget keeps the previous government's 2.8 percent of GDP target, while increasing the emphasis on social spending.
As previously, Fitch highlights the potential risk to the economy posed by a wide current account deficit of 12 percent of GDP, especially in the case that capital inflows falter.