Wednesday, May 2, the international rating agency Standard & Poor’s increased Latvia’s short term and long term evaluation in relation to local and foreign currency from BB+/B to BBB-/A-3 with a stable outlook of this rating’s projection in the future. Also, the assessment of the free money flow and conversion rating was raised from BBB+ to A-.
With this decision S&P restores Latvia’s credit rating investment level, which is an important evaluation of Latvia’s potential for economic development. Currently, Fitch Ratings and Moody’s agencies have given Latvia an investment category credit rating, Ministry of Finance reports.
«While the credit rating of other European countries decreases, Latvia’s positive economy tendencies are continuously evaluated with a rating increase. Standard & Poor’s was the last of the worldwide respected rating agencies which increased Latvia’s credit rating up to investment level. The increase of the credit rating is a significant signal to the development of Latvian economy, it decreases loan service costs and improves foreign investments», – Prime Minister Valdis Dombrovskis comments on the agency’s decision.
«The development of Latvian economy goes faster than expected, the fact of which is backed by the data of budget completion for the first quarter of 2012 – the deficit of the state budget decreased by LVL 121.7 million. At the same time it is still necessary to follow a strict fiscal discipline. Our following objectives are to strengthen our country’s competitiveness and decrease the pressure of inflation», – Dombrovskis says.
«The credit rating agency has honestly assessed Latvia’s future potential thanks to cooperative actions of the government and businessmen, which received support of the people to balance out the state economy. Right now Latvia coincides on the background of all other European Union countries, because we are expecting a faster economic growth than any other member country, this is why Latvia becomes more and more attractive to foreign investors and international companies», – notes the Minister of Finance Andris Vilks.
Standard & Poor’s explain their decision that Latvia’s political environment and fiscal discipline improved in the previous period, because Latvia continues to follow their fiscal goals, decreasing their overall government budget deficit from 8.2% from GDP in 2010 to 3.5% of GDP in 2011.
The agency also notes that the recent government reforms and their determination will strengthen the political responsibility and will ensure medium term fiscal discipline, as well as a significant economic elasticity and export increase in the GDP structure.