Japanese credit rating agency "R&I" upgrades Latvia's credit rating

The Japanese credit rating agency "Rating and Investment Information, Inc." ("R&I") has upgraded Latvia's credit rating from BB+ to BBB-. The rating outlook is stable, LETA was informed by the Finance Ministry.

The ministry explains that, by taking this step, "R&I" also restores Latvia's credit rating at the level of investments. Therefore it is an important assessment of Latvia's potential for economic development. Such international credit rating agencies as "Fitch Ratings" and "Moody’s" have also assessed the country's credit rating.

"We are all witnesses of a unique moment, when most countries see their credit ratings reduced, whilst Latvia's rating is upgraded. "R&I" has appreciated the achievements of our government and society. Therefore this assessment is twice as important," said Finance Minister Andris Vilks (Unity).

"R&I" explains in its announcement that, after being engulfed by the economic crisis in 2008, Latvia has increased the stability of its economic fundamentals through efforts to adjust its economic structures. With the government's fiscal consolidation also progressing better than scheduled, the predictability of Latvia's fiscal position and the certainty of the government financing have increased as well.

It is stated that, even following the dissolution of parliament and snap general election in September 2011, incumbent Prime Minister Valdis Dombrovskis (Unity) has remained in place, and such a political development has also been contributing to securing the stability of the government's fiscal management.

The economic and financial situation in Europe, with which Latvia has strong linkages through trading and banking activities, has grown increasingly murky. However, "R&I" sees it has become less likely that Latvia's economic and fiscal stability will be greatly shaken even with a further deterioration of the external environment.

Real gross domestic product (GDP), which plunged in the wake of the global financial crisis, has grown on a year-on-year basis since the third quarter of 2010. In the third quarter of 2011, GDP growth of 6.6%was recorded. According to the government's forecast, full-year growth in 2011 is expected to be 4.5%.As external demand is expected to be subdued in 2012 due to the economic malaise in Europe, which is Latvia's main destination for exports.

"R&I" points out that the Latvian government forecasts the economic growth rate to throttle down to 2.5%. Even if the growth rate in 2012 falls somewhat below the government outlook because of deterioration in the external environment, however, "R&I" sees little probability that the economic fundamentals will be deteriorated.

LETA
Image: balsas.lt

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