According to preliminary results, the ruling party Georgian Dream, which was founded by former Prime Minister Ivanishvili, won a large majority of the seats during the latest parliamentary elections (held in two rounds), hereby tightening its grip on power. If results are confirmed, Georgian Dream would hold a two-third majority in parliament and hence be allowed to amend the constitution. The United National Movement (of former President Saakashvili - who is now governor of the Ukrainian region of Odessa - is the main opposition block. Elections were peaceful and marked by low turnout.    

Impact on country risk

Political continuity is assured as the ruling party has strengthened its control of parliament. The Georgian Dream party is likely to continue its foreign policy of integration with the West and improving its relations with Russia which controls a part of the Georgian territory. In this unchanged political context, Credendo Group’s short-term and MLT political risk categories are stable. Category 3 for the short-term political risk is mainly explained by the moderate level of short-term debt and sufficient level of foreign exchange reserves (slightly above the standard 3 months of imports covered). Public finances are relatively in good shape with moderate fiscal deficit and moderate but rising level of public debt (slightly above 40% of GDP in 2015). The elevated level of external debt and relatively high level of current account deficit continue to impede the MLT political risk (along with other factors such as the political situation) which is currently in category 6.

Analyst : Pascaline della Faille, p.dellafaille@credendogroup.com