The international credit rating agency Fitch Ratings (Fitch) has published a statement on Latvia’s credit rating, where it has been maintained the level of A- with a stable forecast of future credit rating, the Latvian State Treasury reports.
In the statement, published on September 3, Fitch highlighted the credible policy framework of Latvia, the country’s membership of the European Union and the eurozone. It also pointed out the fact that Latvia’s government debt level was below the average of A-rated peers as the main factors, which supported Latvia’s current credit rating level. Fitch evaluated that Latvia’s credit rating was limited by a significantly lower income level and higher net external debt than peers.
According to a press release by the Latvian State Treasury, the agency believes that a stable outlook reflects confidence that the economy will continue to show resilience to the shocks caused by the pandemic and the government will implement policies in line with the long-term sustainability of public finances.
As to the possible factors, which could influence the positive future development of the Latvian credit rating, the credit rating agency listed the government’s ability to bring general government debt/GDP back to a firm downward path over the medium-term. This was expected once Covid-19 subsided and the effective implementation of NGEU programs together with structural reforms, which could increase economic growth in the medium term and would mitigate the impact of long-term demographic challenges.
As to the possible negative effects, the future development of Latvia’s credit rating could be a persistent upward trend in government debt-to-GDP, deterioration of the international competitiveness or structural shocks in key sectors of the economy, which would negatively affect Latvia’s economic growth or financial stability.
Previously, Fitch published Latvia’s credit rating on March 19, when Latvia’s credit rating was affirmed at A- level with a stable outlook, according to the press release by the Latvian State Treasury. (BNN/Business World Magazine)
