Moody's deems Georgia's parliamentary election credit positive

By bne IntelliNews November 8, 2016

Georgia’s parliamentary elections demonstrate institutional strength and support policy continuity, therefore they are considered positive for the country's credit ratings, Moody's said in a note published on November 7.

Georgia held parliamentary elections in October, which resulted in a landslide victory for the ruling Georgian Dream-Democratic Georgia (GDDG) party, which won 115 out of the 150 seats in the parliament. As a result, the leading opposition party, United National Movement, will see its number of seats in parliament decline from 65 at the moment to 27. Two other small parties - the Alliance of Patriots and the Industrialists will occupy six and one seats respectively, while an independent candidate will occupy the remaining seat. 

That voters overwhelmingly supported the ruling GDDG party at the polls is likely to enable the country to remain on a path of democratic and market reforms, which will include improving governance and strengthening the education and tax systems, according to Moody's.

Despite the modest voter turnout of approximately 37.5% in the runoff (the first round had turnout of more than 50%), the outcome revealed relatively broad support for the current government’s policies, which have helped buoy Georgia’s economy and fiscal position despite weakness throughout the Commonwealth of Independent States, Moody's points out.

Nevertheless, the ratings agency warns of possible risks to look out for. “The GDDG’s greater-than-three-fourths majority now gives it the unilateral ability to modify the constitution. The GDDG has previously indicated a desire to rework the constitution by moving to a pure parliamentary regime from the current semi-presidential regime (reducing the office of the president to a more ceremonial role) and implementing a full proportional representation electoral system. Although not our baseline, such a large majority in parliament might create incentives to alter the constitution for partisan advantage, a risk that could undermine the independence and strength of Georgia’s institutions,” it concludes. 

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