By Paul Abelsky and Helena Bedwell

Nov. 22 (Bloomberg) -- Georgia had its sovereign-credit rating raised by Standard & Poor’s one notch to BB-, three levels short of investment grade, on the government’s fiscal- consolidation plans.

The rating has a stable outlook, meaning it is more likely to remain unchanged than to be lowered or increased, S&P said today in a statement. The BB- assessment is one level higher than Ukraine and Albania.

“The upgrade reflects our view of Georgia’s strong growth prospects and improving public finances,” S&P said in the statement. “These strengths are underpinned by its commitment to market-oriented policies and its previous structural reforms and fiscal consolidation.”

Georgia is seeking to revive its $11.7 billion economy by luring investments in energy and tourism.

Gross domestic product grew 6.4 percent in 2010 after shrinking 3.8 percent the previous year. Economic growth slowed to 4.7 percent in the second quarter from a year earlier, compared with 5.8 percent in the previous three months.

The country’s fiscal deficit will narrow to 3.7 percent of GDP this year from 9.2 percent in 2009, S&P said.

Spending Pressures

“We expect the government will adhere to its newly legislated fiscal rules, which oblige it to reduce the deficit to 3.0% of GDP by 2013,” S&P said. “The government has frontloaded expenditure-based fiscal consolidation in 2011, ahead of what will likely be spending pressures ahead of the 2012 parliamentary and 2013 presidential elections.

A reduction of Georgia’s external vulnerabilities through energy and tourism exports, or foreign-investment inflows, would prompt the ratings company to consider another upgrade, according to the statement.

‘‘Political risk does remain a constraint on the ratings, although in our view this continues to ease,’’ S&P said.

URL: http://www.businessweek.com/