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"Standard & Poor's" raises Latvia's credit rating

 RIGA, Nov 9 - Today, international credit rating agency "Standard & Poor's" raised long- and short-term local and foreign currency sovereign credit ratings on Latvia from "BBB-/A-3" to "BBB/A-2" and Latvia's transfer and convertibility (T&C) assessment from "A-" to "A", LETA was informed by the Finance Ministry.
Finance Minister Andris Vilks points out this assessment is very important for Latvia's economy and is a substantial signal to foreign investors.
"I am pleased with this decision, since the credit ratings on most EU member states are currently, on the contrary, being reduced. Latvia is capable of implementing a consistent policy, bringing order to public finances, reducing an excessive budget deficit and ensuring a stable and predictable tax system," says the minister.
Vilks reminds that Latvia's macroeconomic and fiscal indicators have been exceeding the projected figures for several years now.
"Standard & Poor's" decision indicates that Latvia's capability of maintaining a responsible fiscal policy, which is also aimed at long-term growth, bears fruit and fosters foreign investors' trust in Latvia as a stable country for work and production, explains Prime Minister Valdis Dombrovskis (Unity).
This in turn creates increasingly better preconditions for new job creation and growth opportunities, says the prime minister.
"Standard & Poor's" explains in its statement that, after the recession, the Latvian government's fiscal consolidation plan reduced public sector employment by one-sixth, significantly raised taxes, and streamlined the public sector. These measures contributed to reducing the fiscal deficit to an estimated 1.6 percent of GDP in 2012, from 8 to 9 percent in 2009 and 2010. In the medium term, the agency expects the government to maintain deficits at the 2012 level.
The upgrade reflects "Standard & Poor's" expectation that Latvia's net general government debt will decline on the back of its strong economic recovery and rapidly improving fiscal balances, and also the agency's view that the economy will come to rely less on external debt financing.
"Standard & Poor's" also views the Latvian economy as one of the most flexible and resilient economies in the EU.
Vilks allows the possibility that "Standard & Poor's" could improve Latvia's credit ratings in the future if the country's financial and inflation indicators remain in compliance with the Maastricht criteria and Latvia joins the eurozone on January 1, 2014.
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