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Friday 25.05.2018 | Name days: Junora, Anšlavs
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S&P upgrades Latvia’s credit rating outlook

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The rating agency Standard & Poor’s Ratings Services (S&P) has improved Latvia’s credit rating from stable to positive outlook.

S&P confirmed the credit rating for the long-term liabilities in foreign currency at BB+ level, but for the short-term obligations in foreign currency at B level, the agency LETA was informed by the Finance Minister Andris Vilks’ Press Secretary Aleksis Jarockis.

The credit rating was upgraded after assessing the decline in the economic dependency from external financing and the strong commitment to implement fiscal consolidation.

The rating agency points out the Latvian economy is quickly recovering balance, aiming at a structure that would be less dependent on the external financing. Over the last two years, the current payment account has formed a surplus, the trade deficit has fallen by two thirds, and the net income balance is positive, because foreign banks have written off part of their investments.

Along with the economic growth resumption, a moderate current account deficit is expected. In its statement, S&P indicates that export volumes in 2010 came closer to the pre-crisis levels in 2008, while the economic growth was generally faster than before.

On the other hand, the Finance Ministry points out if the Latvian economy and the fiscal situation continues to stabilize and the Parliament immediately adopts this year’s budget amendments, the rating agencies could also review Latvia’s credit rating.

At present, when the government is working on this year’s budget amendments, Latvia’s credit rating future outlook has been upgraded from stable to positive. Such assessment is crucial for the Latvian economic development potential. The agency approvingly evaluates the government’s achieved work in reducing the budget deficit and ensuring sterner fiscal discipline, Vilks says.

The Minister, however, points out that in order to attain credit rating improvements in the near future the government must immediately agree on specified and quality budget consolidation measures. Also, I expect from my colleagues at the government a more targeted work in the structural reform implementation in the public sector, Finance Minister emphasizes.

As reported, currently, Latvia’s credit rating is determined by three major international rating agencies – Moody’s Investors Service, Fitch Ratings and Standard & Poor’s, as well as by the Japanese rating agency Rating and Investment Information (R&I).

In late January, R&I raised Latvia’s credit rating future outlook by two notches from negative to positive, maintaining a solid credit rating at the previous level (BB+).

The Japanese rating agency’s assessment is important because it increases Latvia’s visibility in Japan’s economic environment and financial markets, enabling the state and businessmen to promote international cooperation and expand the investor base. This will add to the Japanese investors’ confidence and interest in Latvia, the Ministry asserts.

In late 2010, S&P raised Latvia’s rating by one notch – from BB to BB+, while maintaining a stable credit outlook.


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