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Credit rating agency Fitch re-affirms Latvia’s credit rating

Created : 29.10.2018.
On Friday, October 26, the credit rating agency Fitch reaffirmed its ‘A-’ long-term foreign and local currency sovereign credit ratings on the Republic of Latvia. The outlook remains stable.

 

Fitch outlines that Latvia’s ratings are supported by solid public finances, as well as institutional strengths and a credible policy framework that come with European Union and Eurozone membership.

Agency positively evaluates Latvia’s level of government debt which is lower compared to peers. Fitch forecasts that general government debt will decrease to 37.2 % of GDP while average general government debt of the ‘A’ group is forecasted at 47.3 % of GDP. Changes in debt levels are related to the successful pre-financing policy of the Treasury.

Activities made by the authorities to regulate foreign servicing sector banks are evaluated approvingly. Agency pays attention to the government formation process after the elections of the Parliament on October 6, but does not expect any change to the economic policy stance.

Agency outlines that a lower income level and weaker external finances than higher rated peers are constraints on the ratings. Credit rating could be downgraded in case of deterioration in Latvia’s public debt dynamics, for example, from sustained fiscal slippage or economic underperformance.

Agency notes that the main factors that could raise credit rating are a sustained improvement in external debt ratios and persistent strong and stable economic growth that fosters higher income per capita, without the re-emergence of macroeconomic imbalances.

The previous international credit rating agencies announcement was published on September 21, when S&P Global upgraded Latvia’s credit rating for long-term local and foreign currency to ‘A’ from ‘A-’ with stable outlook.

 

Full press release in Fitch homepage.