Fitch Ratings revised its view on Georgia's sovereign credit trajectory to positive from stable, while keeping the country's Long-Term Foreign-Currency Issuer Default Rating at 'BB'. The agency highlighted a substantial accumulation of foreign exchange reserves and a narrowing external deficit as the key drivers behind the outlook change.
Gross international reserves climbed to a record $8.2 billion in September, marking an increase of $2 billion since the end of 2025. Fitch attributed this rise to tighter monetary policy, continued capital inflows and an improvement in the current account - which narrowed to a deficit equal to 1.5% of gross domestic product on a four-quarter rolling basis through mid-2026.
Economic momentum underpins the ratings view. Fitch projects real GDP growth of 7.5% for 2026, noting the economy previously averaged growth above 8% between 2023 and 2025. The agency said that investment-driven domestic demand coupled with strong export performance has helped to limit near-term overheating pressures, even as external payments coverage lags the 'BB' peer median.
On fiscal matters, Fitch pointed to conservative budget assumptions and disciplined fiscal management. General government debt is expected to fall by 2 percentage points to 32% of GDP this year, a level substantially below the 52% median among 'BB' rated peers. The ratings note also emphasized that general government debt retains material foreign-currency exposure, exceeding 60%.
Domestic financial sector indicators were cited as another stabilizing factor. Banks and other financial institutions posted a combined average return on equity of 23.2%, while dollarization in both deposits and loans declined to the low 40% range by the late third quarter. These trends were supported by targeted macroprudential measures and higher reserve requirements, according to Fitch.
Despite the positive reassessment, the agency flagged several constraints. External payments coverage still trails peers at the 'BB' level. Political polarization that intensified following contested parliamentary elections in 2024 and stalled negotiations for European Union accession add layers of uncertainty. Fitch made clear that further upward movement in the rating would depend on continued reductions in external vulnerabilities, while renewed domestic political turmoil or deterioration in the external balance could create downward pressure.
Overall, Fitch's decision reflects a mix of strengthened external buffers, robust growth and prudent fiscal and macroprudential policies, balanced against persistent political risks and an external coverage position that remains below the peer benchmark.
Key takeaways:
- Record gross international reserves reached $8.2 billion in September - a $2 billion rise since end-2025.
- Fitch affirmed Georgia's Long-Term Foreign-Currency IDR at 'BB' and upgraded the outlook to positive, citing reserve accumulation and a narrower current account deficit of 1.5% of GDP (four-quarter rolling through mid-2026).
- Projected real GDP growth is 7.5% for 2026, after average growth above 8% between 2023 and 2025; fiscal and banking metrics show improved resilience.
Impacted sectors: sovereign debt markets, banking and financial services, export-oriented industries, and public finance.