Fitch affirms Latvia`s credit rating in A- level
On Friday, March 19, the international credit rating agency Fitch Ratings affirmed Latvia's credit rating at the 'A-' level with a stable credit rating outlook.
Minister of Finance notes: “High credit rating is essential precondition to maintain confidence of financial markets and investors to Latvia’s creditworthiness, thus supporting a faster recovery and economic growth.”
As the main factors for the rating affirmation at ‘A-‘ level Fitch mentioned a credible policy framework, the benefits from the EU membership and eurozone, and government debt that is well below the median of ‘A’ rated category peers. A stable credit rating outlook shows the agency's confidence that Latvian economy will continue to show resilience to the challenges from Covid-19 pandemic and that the government's policy will be consistent with the long-term sustainability of the public finances.
The agency mentions a low income level, volatile GDP ratio and relatively high share of external debt of total debt as limiting factors for credit rating upgrade.
Fitch forecasts that in the second half of 2021 the impact of the pandemic will diminish and recovery and growth of the economy will be boosted by domestic consumption and export industries. Latvia's fiscal policy is adapting to the current need to provide support to mitigate the negative effects from Covid-19, which will increase the 2021 budget deficit to 7.1% of GDP, at the same time the agency forecasts that starting from 2022 the budget deficit and public debt will decrease.
Fitch released the previous announcement about Latvia's credit rating on October 9, 2020, when Latvia's credit rating was affirmed at 'A-' level, but the outlook was changed from negative to stable.
See the full report on the Fitch Ratings website.