Investment News

Investor.ge provides a brief update on investments and changes in government policy that could impact the business environment. Information in this issue was taken from agenda.ge and other sources.

Fitch affirms Georgia at BB credit rating, revises outlook to ‘stable’
Fitch Ratings, a global financial ratings firm, maintained Georgia’s sovereign credit rating at the BB level in its latest rating action report but revised its outlook from “positive” to “stable.” Released on June 21, the international credit rating agency’s statement cited moderate government debt levels of 39.1% of GDP, which is well “below the current ‘BB’ median of 54%,” as well as a solid budget performance record, strong GDP growth, and “low, but rising inflation” as some of the factors behind its decision to hold the country’s rating at BB.
It also highlighted “increased levels of political risk” related to “the introduction and final passage of a ‘foreign influence transparency’ law in May 2024” and “growing polarization in society and weakened trust in public institutions” that “will likely negatively affect Georgia’s governance indicators.” These factors, along with weaker external finances, including the decline of “international reserves to $4.6 billion as of end-May 2024 from a peak of $5.4 billion in August 2023,” and a weakening of policy framework, led the credit agency to revise its outlook from “positive” to “stable.”
Despite these concerns, the credit agency noted that it “expects growth to remain robust, at 5.8% in 2024 and an average of 5% in 2025-26, driven by domestic consumption and private and public sector investment.”

Georgia hosts 2024 m&i Forum in bid to diversify tourism
From June 30 – July 4, Georgia hosted the 2024 edition of the m&i Forum, a major annual event for the meetings, incentives, conferences and exhibitions (MICE) tourism industry. Welcoming representatives of 83 local and international companies who provide tourism services over three days in a B2B format in Tbilisi, the event offered participants the opportunity to explore domestic infrastructure, visit tourist attractions, meet local tourism sector representatives, and connect with leading companies to establish business relationships with the potential of hosting events in Georgia.
Speaking at the event, Georgian Deputy Economy Minister Mariam Kvrivishvili said hosting the forum served as “great recognition” for the country and a testament to the country’s tourism products and potential, infrastructure, airline connections, strong private sector, and security.

National Bank of Georgia holds interest rate at 8%
The National Bank of Georgia (NBG) on June 19 decided to keep the refinancing rate unchanged at 8% as inflation in the country remained below the target rate, with overall prices increasing by 2% annually in May and core inflation at 1.7%.
The Monetary Policy Committee of the Bank expressed concerns about “heightened uncertainty” stemming from “domestic and external challenges” and highlighted the impact of exchange rate volatility on imported inflation. It also noted recent fluctuations in international oil and food prices, along with a surge in inflationary expectations in recent months.
“International oil prices have recently decreased, but the international food price index has been increasing for the last two months,” it noted. Inflationary expectations have risen in recent months while domestic economic activity has also been “stronger than expected, driven by increased credit activity,” the NBG added.
Acting Governor of the NBG Natia Turnava said that recent market fluctuations were “largely the result of artificial agitation” leading to deterioration in inflationary expectations. “We are observing the macroeconomic fundamentals remaining robust and positive across various components – including low inflation, economic growth, remittances and tourism receipts. Accordingly, we have compelling reasons to expect that, all else being equal, we will continue to pursue a policy of monetary easing,” she said.
The body added it would gradually return to reducing the policy rate if additional risks did not materialize. However, it also warned that fuel inflation expectations could potentially lead it to take a more neutral position for an extended period or necessitate further tightening of monetary policy.

ADB announces tender for development plan of new Tbilisi airport
The Asian Development Bank (ADB) has issued a tender for a general development plan for the new Tbilisi International Airport, the United Airports of Georgia announced on June 24. The state-owned company added that it would oversee the selection process for a consulting company to develop the plan and share 50% of the project’s costs with the ADB, marking the first instance of the bank and the state company equally sharing costs.
General Director of United Airports Georgia Irakli Karkashadze said that all airline and consulting companies would have the opportunity to participate in the tender for the facility planned at the location of the former military airfield in Vaziani. He emphasized the need for a “detailed and comprehensive” general development plan for the new airport, following preliminary studies and market research conducted in collaboration with the ADB.
The tender process consisted of two stages, with a two-week window for companies to submit documentation in the first stage and detailed technical offers if they are selected to move to the second stage. The winning company will be announced in July.
This comes after Georgian Prime Minister Irakli Kobakhidze announced plans for a new international airport for Tbilisi in April with a greater capacity than the current airport, which is able to serve 4.5 million passengers per year. In comments on the project, Economy Minister Levan Davitashvili said the government aimed to have a “detailed plan by the end of 2025,” with construction expected to take three years, making the airport “fully operational” by late 2028. The project is expected to cost $1.26 billion.

New insurance regulations for tourists pushed back until 2026
Tourists entering Georgia will be required to have health and accident insurance starting from January 1, 2026, the Parliament of Georgia said on June 17 in its announcement of amendments to the domestic law on tourism.
Originally set to be implemented on June 1, 2024, the date was pushed back as the parliamentary majority, who initiated the amendment, said its introduction involved “multiple stages of preparation.” The lawmaking body said this would include informing the private sector and diplomatic representations and holding public information campaigns to help the sector “effectively adapt” to the upcoming changes.

Georgia’s national football team makes history at the Euro Championship
The Georgian national football team exited the European Championship in Germany on June 30 after being defeated by Spain following an impressive first appearance that saw them advance to the final 16.
After initially conceding a goal, Spain came back to beat Georgia 4-1 at the Düsseldorf Arena. Georgian head coach Willy Sagnol said the team would be “overjoyed at how the Euro 2024 went once the disappointment of the defeat lifts.”
“We’re a bit sad because we lost. But l’m sure in some days we will realize what we have done, and I’m sure happiness is going to come back very quickly,” said Sagnol.
The official UEFA match report also praised the Georgian team for its performance at its first major tournament by saying the 2024 edition marked “a tournament to be proud of.” The squad qualified for the knockout round of the championship as the best third-placed team in the group stage, where they finished behind Portugal and Turkey in Group F after defeating the former 2-0 in the final game of the round. The team also lost to Turkey on the opening matchday before drawing with Czechia.

Inflation in June down by .5%, with annual figure at 2.2%
The consumer price index in Georgia decreased by 0.5% in June compared to May, with an annual inflation rate of 2.2%, Geostat announced on July 3.
The main factors contributing to the monthly inflation rate were the reduction in prices for food and non-alcoholic beverages, particularly for vegetables, fruit and grapes, meat, and bread. The inflation data also shows a rise in prices for alcoholic beverages and tobacco (+0.9%), along with increased costs for accommodations (+3.8%), and catering services (+0.8%).
The annual inflation rate was also influenced by price changes for transport (+11%), restaurants and hotels (+7.5%), alcoholic beverages and tobacco (+3.4%), and food and non-alcoholic beverages (1.9%).

New international flight routes announced from Tbilisi Airport
The civil aviation authorities of Georgia and South Korea on June 30 signed a memorandum enabling their airlines to operate regular passenger and cargo flights seven times per week. The Georgian Civil Aviation Agency said the authorities discussed technical aspects related to the start of regular operations, such as the current airline market situation and regulatory standards. The body added the authorities agreed they would “actively” continue to work to promote the process. For reference, charter air traffic between Georgia and South Korea commenced in 2018, while Korean Air initiated seasonal flights to Georgia in May and June of this year.
This announcement comes one week after SF Airlines, a Chinese cargo airline, announced that it will begin operating flights through Tbilisi International Airport starting from July 20. TAV Georgia, which operates the airport, said the airline would run weekly flights from Urumqi to Tbilisi using a Boeing B757 aircraft. Following the initial launch, SF Airlines aims to increase its flight frequency to twice a week, starting on August 24. With a fleet of over 80 aircraft worldwide, SF Airlines is considered the largest cargo airline in China.