Fitch Ratings downgraded Georgia鈥檚 outlook to negative from stable on Friday, citing sharply increased political risks following disputed October parliamentary elections that have sparked widespread protests in the Caucasus nation.
The ratings agency maintained Georgia鈥檚 long-term foreign currency rating at 鈥楤B鈥� but warned that ongoing political turmoil could undermine investor confidence and pressure the country鈥檚 external finances.
The move comes as pro-EU opposition parties have refused to recognize election results that saw the ruling Georgian Dream party secure 89 out of 120 parliamentary seats.
Opposition groups have vowed to boycott parliament amid allegations of electoral fraud.
Adding to tensions, Georgia鈥檚 government recently announced a postponement of EU accession talks until at least 2028, despite constitutional obligations to pursue membership and overwhelming public support for European integration.
鈥楶olitical risks are likely to remain very high,鈥� Fitch said, noting that 鈥榓 protracted political crisis could undermine the institutional framework and affect investor and domestic confidence.鈥�
The agency highlighted concerning economic indicators, including a 13 per cent drop in international reserves to $4.1 billion in October 鈥� equivalent to just 2.1 months of current account payments, well below the median for similarly-rated countries.
Despite these headwinds, Georgia鈥檚 economy has shown resilience, posting 10 per cent growth in the first 10 months of 2024.
Fitch projects growth will end the year at 8.7 per cent and moderate to 5.3 per cent in 2025 as political uncertainties weigh on the outlook.
More trouble is expected after December 14, when Georgian Dream lawmakers elect a loyalist to succeed pro-Western President Salome Zurabishvili.
She has vowed not to step down until the parliamentary polls are re-run.
