The credit rating agency S&P Global Ratings affirms Latvia's creditrating at the high "A+" level.
The Agency remarks the effective policy response by the Latvian authorities' to limit the spread of Covid-19 in Latvia and implemention of significant measures to support the economy.
Thanks to the strong track of the fiscal discipline prior to the COVID-19 outbreak and the level of public debt, which is one of the lowest in the euro area, the government has a sufficient fiscal flexibility to manage country`s economy in the current situation.
Compared to the financial crisis on 2007-2009, the Latvian economy is more diversified and resilient to a various shocks. The Agency believes that the government's support measures and the recovery of the country`s main trading partners would contribute to the return to 2019 GDP levels around min-2022, allowing the reduction of fiscal deficits and the stabilization of public debt levels in the coming years. Despite the increase in the impact of the Covid-19, Latvia’s public debt level will remain among the lowest in the Euro zone.
Although, the S&P considers that Latvia`s party system remains highly fragmented and unstable, policy-making in Latvia is effective. This confirms that, despite consistently high political division, policymaking in Latvia remains effective, which supports the sovereign ratings.
The Agency noted that the increase in Latvia's credit rating could be facilitated by the continued growth of economic indicators in relation to the other peer countries, while maintaining a strict fiscal policy. At the same time, the Agency draws attention to the fact that low incomes and long-term demographic challenges remain the main limitations of credit rating.
The previous credit rating agency’s S&P announcement was published on February 21, 2020, when agency upgraded Latvia from ‘A’ to historically highest ‘A+’ level with a stable outlook.
Full announcement is in the S&P Global Ratings official web page (registration necessary).
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