A government meeting was held on 26 August 2014. During the meeting, the Minister of Economy and Sustainable Development of Georgia, Giorgi Kvirikashvili, made a statement:  “The rating of Georgia has improved in the ratings of Moody’s credit rating agency. The agency has changed its assessment from stable to positive. This is good news not just for loans but for companies as well. It will make it easier for them to attract financial resources. This includes the financial institutes as well as the companies which have credit relations with foreign partners.”


took interest in this statement and verified its accuracy.


is an international credit rating agency. With Standard and Poor’s and the Fitch group, it is one of the biggest credit rating agencies in the world. Moody’s sets ratings for creditors, taking into consideration the financial risks and possible losses in the case of a failure to fulfil obligations.

Moody’s was founded in 1909 by John Moody. At the first stage of its existence the agency published statistics about financial bonds and assets.

On 22 August 2014, the London investors service of Moody’s changed the rating

of Georgia and promoted it from stable to positive (BA3). The decision was the result of signing the Deep and Comprehensive Free Trade Agreement (DCFTA) between Georgia and the European Union. The agreement will enable Georgia to attract more foreign investments and increase export. In the medium-term perspective this will facilitate the improvement of the external position of the country. The BA3 rating will protect the Georgian economy from external and geopolitical risks in the near future.

We carefully examined the Moody’s report about changing Georgia’s rating.

The report says that “the rationale for changing the outlook was the Association Agreement signed between Georgia and the European Union on 27 June 2014 as well as the improvements in Georgia's economic governance and institutional capacity since the Rose Revolution of 2003.”

The European Union is one of Georgia's largest trading partners. In 2013, Georgia's goods exported to the EU accounted for 21% of total goods exports whilst Foreign Direct Investment (FDI) from the EU (mostly from the Netherlands, Luxembourg and Germany) accounted for 43% of all FDI over the period from 2010 to 2013. The DCFTA is expected to strengthen the role of the EU, both as an export destination and source of investment for Georgia.

The report also points out that the reforms implemented by the Georgian Government since 2003 have improved the ratings of the country in world rankings. “According to the World Bank's 2014 'Ease of Doing Business' survey, for example, Georgia ranked 8th out of the 189 countries surveyed, an improvement on its 100th place (out of 155 countries) in 2005. Georgia ranked 72nd out of 148 countries in the 2013-14 World Economic Forum's Global Competitiveness Index, up from 77th in the previous survey (2012-13). Lastly, according to the 2012 World Bank governance indicators for government effectiveness, the rule of law and the control of corruption, Georgia is positioned, respectively, 48th, 63rd  and 50th (

out of the 122 countries rated by Moody's and that are covered by the survey).” Moody’s believes that the changes in the rating will facilitate the improvement of the external position of Georgia and help to narrow the fiscal deficit.

“Moody's expects Georgia's external debt will stabilise and start to fall over the short to medium term given sustained net FDI and a progressive narrowing of the current account deficit. External debt reached 82% of GDP in 2013 or 65% of GDP if intra-company debt is excluded from the calculation (which represents less risk from a balance of payments crisis perspective as it is more likely to be rolled over). At present, this exceeds the median and mean for BA-rated countries (both around 50% of GDP).”

For additional information about Moody’s ratings FactCheck

examined an interview with economist, Roman Gotsiridze, who discussed this issue with the GHN news agency.

Mr Gotsiridze stated:  “Moody’s ratings reflect the ability of a country to service its external obligations on time. They also show how big its loans are and whether or not there is a danger for them to cause problems for the development of the economy. As for this particular case, there have been no important changes in the rating; major parameters are the same and only the outlook of the future trends have changed. The outlook for the future has changed from stable to positive. Thus, to put it correctly, the rating has improved and that, of course, is good.”

Roman Gotsiridze also explained the reasons for the improvement of the rating:  “There are several reasons, the first being technical while the second is institutional. The first is the reduction of external debt. The current year has been quite hard in terms of servicing the external debt. The National Bank fully repaid its debt to the International Monetary Fund. The government also covered a significant amount of the debts. Stopping the devaluation of the lari

also had a big effect as it was a major issue from November to January and drained the foreign currency reserves by USD 470 million. In the last six months the exchange rates stabilised and the National Bank boosted its reserves by USD 100 million in August. The process is expected to continue due to the tourist season. Money transfers from abroad (especially Russia) have not reduced as was expected due to the Ukraine crisis. These components are the main sources for foreign currency inflows and for covering the trade balance deficit (GEL 1.5 billion per year). In addition, there still are some risks. The external debt has been reduced however the government significantly increased the amount of domestic debt, borrowing large amounts of money from Georgian commercial banks to balance the budget deficit. The second reason for the improvement of the rating is the ratification of the Association Agreement with the European Union meaning that the perspectives are good, provided that we shall use them properly. The word ‘positive’ in the ratings reflects this approach.”


According to Moody’s, the ratings of Georgia’s economic conditions have moved from stable to positive. This is a significant incentive for foreign investors and for improving international trade relations. The changes in the rating mean that there are better conditions and fewer risks for foreign direct investments.

FactCheck carefully examined the Moody’s report about changing Georgia’s rating. Hence, we conclude that Giorgi Kvirikashvili’s statement:  “The rating of Georgia has improved in the ratings of Moody’s credit rating agency. The agency has changed its assessment from stable to positive,” is TRUE.