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"Fitch" upgrades Latvia's credit rating

 RIGA, Nov 14 - International credit rating agency "Fitch Ratings" has upgraded Latvia's long-term foreign currency Issuer Default Rating (IDR) to "BBB" from "BBB-" and long-term local currency IDR to "BBB+" from "BBB".
The outlooks on the long-term IDRs are positive. The agency has also raised the Country Ceiling to "A" from "BBB+", increasing the Country Ceiling notching to three from two. "Fitch" has simultaneously affirmed Latvia's short-term foreign currency IDR at "F3".
A favorable assessment by one more credit rating agency in such a short period of time indicates that Latvia is a successful example to other European countries. Latvia is capable of ensuring the fastest economic growth, bringing order to public finances and reducing national debt. The upgrade also indicates that the government's policies and decisions are on the right track, points out Finance Minister Andris Vilks (Unity).
"Fitch" indicates that the upgrade reflects Latvia's progress in achieving solid and broad-based economic growth, further cutting its budget deficit, improving its terms of market access and reducing its net external debt ratios.
"Fitch" forecasts Latvian GDP growth at 5 percent year-on-year in 2012, up from 2.5 percent at the beginning of 2012, on the basis of GDP growth of 5.7 percent on average in the first three quarters.
The rating upgrade also reflects the government's strong track record of fiscal consolidation. "Fitch" forecasts the 2012 budget deficit at 1.9 percent of GDP, below the target of 2.5 percent due to increasing tax revenue (particularly from value added tax and personal income tax) and lower government expenditure. The reduction in the deficit from 9.7 percent in 2009 is the sharpest adjustment over the period of any "Fitch"-rated sovereign with the exception of major oil exporters. The agency believes the government's targets to reduce the budget deficits to 1.4 percent in 2013 and 0.8 percent in 2014 are realistic.
"Fitch" expects Latvia to meet the Maastricht criteria in spring 2013, and to be invited to join the euro in January 2014.
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