Japanese credit rating agency R&I affirmed Latvia's credit rating at A level with stable outlook
In accordance with agency`s view, despite the economic slowdown due to the inflation and the decelerating economy of major European countries, Latvia maintains the strength of economic fundamentals that support the country's creditworthiness. R&I believes that Latvia is able to maintain stable economic growth in the medium term, given the strength of the economic and social system such as its favourable business environment and the investments funded by the European Union.
Agency notes, that the fiscal balance is improving and the debt to GDP ratio stands at low level. According to the agency`s view, given the curbed burden of interest payment and cash reserve, there is no problem in terms of Latvia`s debt burden and affordability.
In accordance with R&I, following the Russia's military invasion of Ukraine, Latvia's economic relationship with Russia has been shrinking. The risk that the country's economic activities will be hampered by the shortage in energy supply is limited, given that the country has already secured alternative sources for natural gas procurement.
Agency concerns that the growth potential of the Latvian economy will be undermined by the persistent trend of shrinking population, going forward. R&I believes that EU funds available in the next several years will give a chance to make progress in the initiatives aimed at strengthening Latvia`s capacity of economic growth and addressing the demographic issues.
The previous credit rating announcement from R&I was published on December 5, 2022, when R&I affirmed Latvia's credit rating at A level, stable outlook.
The full text of a publication is available on the agency`s website: https://www.r-i.co.jp/en/index.html