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10 June 2013

Latvian Finance Ministry: Standard and Poor's raises Latvia's credit rating


Standard & Poor's has raised Latvia's credit rating by one degree, establishing stable rating forecast in the future. The assessment for the long-term and short-term obligations in the local and foreign currency is raised from "BBB" to "BBB+", with stable rating forecast in the future.

"As it was forecasted previously, as soon as Latvia receives a positive signal about the possibility to join the eurozone, Latvia’s credit rating will be raised. And now that has happened. Latvia can further continue to provide the most rapid economic growth in the European Union in order to facilitate increase in welfare in our country as well as to increase the competitiveness of our businessmen. It is expected that also other rating agencies during a half-year will raise the credit rating of our country”, indicates the Latvian Minister for Finance, Andris Vilks.

Standard & Poor’s substantiates their decision by a positive assessment for joining the eurozone published in the Convergence Report of the European Commission and by the forecast that Latvia already from 1 January 2014 will adopt the euro. By the fulfilment of the Maastricht criteria Latvia has proved that its implemented policy is efficient.

In the announcement of the Standard & Poor’s it is specified that Latvia’s membership in the eurozone could positively affect the creditworthiness of the government, decreasing currency exchange risks and providing for the Latvia’s banking system the access to the European Central Bank (ECB) as creditor and provider of liquidity. The adoption of the euro would prevent inconsistency, which is observable in the Latvia’s banking system, that is, the majority of loans already are in the euro currency. Thus, the economy of Latvia would access a wide, well-developed capital market, where transactions are made in in the currency used by the state, as well as the flexibility provided by the strong monetary policy of the ECB.

Standard & Poor’s also forecast that after the adoption of the euro the Latvian government will continue to implement the fiscal policy, which corresponds to its initiated plan. The agency expects that Latvia’s fiscal deficit in the medium term will be maintained at around 1 per cent of GDP, thus facilitating the sustainable decrease of general government debt until 2015 below 30 per cent of GDP.

Full press release



© Ministry of Finance of the Republic of Latvia


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