Fitch Ratings has affirmed the long-term Issuer Default ratings ( IDR) of Georgia's foreign and local currency at level B. The agency also affirmed the short-term IDR of Georgia in foreign currency B and raised the country ceiling at the level of B to BB-. Ratings are excluded from the list Rating Watch Negative, for long-term IDR assigned a Stable outlook.

The influx of large-scale international aid to sustain the economy and creditworthiness of Georgia after the military conflict with Russia in August 2008 and the global financial crisis, while the risk of the third round of significant internal political instability has decreased after the cessation of mass demonstrations by the opposition, - said Edward Parker, head of the analytical group Fitch's sovereign ratings of European countries with developing economies.

sharp negative change in the level of confidence, remittances from citizens working abroad, metal prices, foreign direct investment and other capital inflows to the private sector had a major impact on Georgia's economy, vulnerable because of large current account deficit and a boom, observed in the banking sector.

At the same time, the IMF program in the amount of $ 1.2 billion package of international assistance amounting to $ 4.5 billion, mainly in 2008-2011., (equivalent to 50% of GDP in 2009) provide funding and budget current account deficit in the short term, strengthening foreign exchange reserves, supporting the financial sector and limiting the extent of recession. According to forecasts Fitch, Georgia's GDP to decline by 4% in 2009, which is less than many comparable countries in the region, and in 2010 will increase to 2%.

At the same time, Georgia is facing considerable difficulties. Government has revised guidance on the budget deficit to 9,4% of GDP this year and in the medium term will be made by the difficult process of strengthening the budget to bring public finances on a stable trajectory.

Fitch expects that the net public debt will increase to 38% of GDP at the end of 2011, compared to 22% at the end of 2008, however, this figure still remains below the 10-year median for countries with ratings category B, and much of Georgia's debt contracted on concessional terms with long maturities and low interest rates.

Fitch expects a significant current account deficit amounting to 16% of GDP this year, which at the same time be reduced as compared to 23% of GDP in 2008, leaving the country dependent on external financing. Rates of global and net external debt is much higher than the median levels for countries with ratings of category B.

traded goods sector is narrow and prone to rapid changes. Georgia should implement rebalance the economy, eliminate the double deficit and ensure the resumption of private capital inflows before the decline in international aid and debt will rise sharply in the years 2012-2014.

The banking sector has a high ratio of loans to deposits, deposits experienced a decrease in the period of crisis and undergoes deterioration in asset quality, but the capitalization is high. High dollarization system makes macroeconomic and financial stability vulnerable to shocks and reduces the effectiveness of monetary policy.

positive note is the reduction of foreign exchange intervention by the National Bank of Georgia, although the currency pressures may re-emerge at any time in the future.

Political risk is relatively high and acts as a significant deterrent to the ratings. Fitch does not expect the resumption of military conflict with Russia or a strong increase of domestic political instability, but risks remain. In the case of weakening of economic policies or political difficulties that could jeopardize the provision of funds from the IMF and key international donors, and lead to lower ratings.

ratings are supported Georgia's GDP per capita and human development, significantly higher than the median for the rating category B, strong GDP growth, demonstrated before the crisis, a favorable business climate (in which points 15 th place, occupied the country according to World Bank study on business conditions for 2009) and strong support from the international community.

Improving the country ceiling reflects Georgia's integration into the global economy and financial system, its willingness to create a favorable business climate and attract foreign direct investment, membership of the WTO and cooperation with international financial organizations, which reduces the likelihood of the authorities of the country's exchange controls.
Today analysts' forecasts for the pair EUR /USD - up for auction in Rendžov: 1.4170-1.4300
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