Moody's Ratings said today it has changed the outlook on the Government of Georgia to stable from negative and has affirmed the country's Ba2 domestic and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt rating.
The ratings agency described the outlook revision as a reflection that the balance of risks facing Georgia has moved back toward stability. Moody's cited a mixture of supporting and challenging factors, noting that strong economic activity has helped to reduce some vulnerabilities tied to domestic and geopolitical tensions. At the same time, the agency emphasized that political and geopolitical pressures within and around Georgia remain in place.
Moody's highlighted cooperation with development partners and international financial institutions as a pillar that supports the effective implementation of fiscal and monetary policies. That external engagement, the agency said, contributes to policy credibility and capacity even as domestic politics and other external tensions continue to present risks to the sovereign's profile.
On the growth front, real GDP growth accelerated to 7.8% year-on-year over the first five months of 2026, up from a 7.5% annual average growth rate in 2025. Moody's projection incorporates the influence of the Middle East conflict and expects average growth of 6.4% in 2026 and 5.5% in 2027.
Fiscal metrics have strengthened alongside the expansion in output. Government debt fell from nearly 60% of GDP in 2020 to around 34% in 2025, a shift Moody's attributes to robust nominal GDP growth combined with fiscal discipline. The ratings agency said that ongoing progress on debt reduction and gradual improvements in the fiscal and debt profile, together with sustained investment and GDP gains, indicate that political strains and a stall in the EU accession process have not undermined Georgia's core credit fundamentals.
Despite the move to stable, Moody's reaffirmed that Georgia's Ba2 rating continues to reflect event-related political risks. These include domestic polarization over the government's foreign policy direction and the delayed process of European Union accession. Geopolitical exposure also remains a factor: Georgia's border with Russia and the presence of Russian-occupied territory within parts of the country leave it susceptible to broader regional tensions.
The ratings committee convened on 25 June 2026 to consider the sovereign rating and noted that the issuer's economic fundamentals and fiscal strength have materially increased. That assessment underpinned the change in outlook even as Moody's maintained the Ba2 rating to reflect the remaining political and geopolitical event risks.
Implications
- Improved growth and reduced debt levels have shifted the balance of credit risks in Georgia toward greater stability.
- Cooperation with international partners bolsters policy effectiveness, supporting the fiscal and monetary framework.
- Political polarization, stalled EU accession, and geopolitical exposure to Russia continue to pose risks to the sovereign's credit profile.