S&P Revises Georgia’s Outlook Down to Stable

Standard & Poor’s revised its credit rating outlook on Georgia to stable from positive, citing increased tensions with Russia and breakaway regions, Reuters reported on May 5.

The sovereign credit rating of “B+”, four notches below investment grade, was affirmed, the ratings agency S&P said on May 5.

“The outlook revision was based on further deterioration of relations with Russia as militarization of the separatist regions increases,” Reuters quoted S&P sovereign credit analyst Trevor Cullinan as saying in a statement. “The decision by The Russian Federation to increase its forces stationed in South Ossetia and Abkhazia will escalate regional tensions and further complicate Georgia’s aspirations to membership in the North Atlantic Treaty Organization.”
 
S&P also said Russia’s actions would likely to put negative pressure on Georgia’s fiscal performance in 2008, potentially interrupting financial inflows to its expanding economy. It also noted that the stable outlook reflected the balance between the Georgian government’s strong commitment to a reformist macroeconomic stance and the high and rising political and security risks.

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