A peaceful transfer of power following Georgia's parliamentary elections reflects positively on the country’s institutions, but may be partly offset by an increase in policy uncertainty, credit ratings agency Fitch said on October 5.
Fitch, which has raised Georgia’s sovereign-credit rating one notch to BB-, three short of investment grade, in December, said that pre-election policy statements by the Georgian Dream coalition, which is set to form the new government, “give no reason to assume that sudden changes in economic, fiscal, or diplomatic policy are likely.”
The credit ratings agency, however, lists number of factors that may trigger uncertainties, one of them is future working relations between Georgian Dream leader Bidzina Ivanishvili, who eyes prime ministerial post, and President Saakashvili, who under the constitution has to remain on post before the presidential elections in October, 2013. Any tensions in working relationship between Ivanishvili and Saakashvili could increase policy uncertainty, according to Fitch.
Another factor highlighted by the credit ratings agency is the Georgian Dream itself, which consists of six diverse parties united around Ivanishvili, who is in politics only for a year. “If divisions emerged within Georgian Dream this too could increase policy uncertainty,” the Fitch Ratings said.
“While detailed policy will evolve as the new cabinet is appointed, at first glance there is no reason to assume that a Georgian Dream government would reverse those structural reforms enacted in recent years that have helped secure growth and successfully attracted FDI. However, there may be a greater emphasis on spreading the benefits of economic growth to combat still-high unemployment and poverty,” the Fitch Ratings said.
President of National Bank of Georgia, Giorgi Kadagidze, said on October 5, that there was no threat to financial stability in the country.
“The National Bank of Georgia has always been, is and will be a guarantor of the country’s financial stability. Today inflation is under control; exchange rate is stable; our banking system is very robust. Moreover, we have record high reserves of up to USD 3 billion, which represents a sufficient cushion to avoid any possible shocks,” Kadagidze said. “I think that there are and there cannot be any question marks about it. I want to reiterate, that the National Bank of Georgia will always be a guarantor of the country’s financial stability.”