International credit rating agency S&P Global Ratings has approved Latvia’s rating at a high A+ level, maintaining stable future outlook.
The agency reports that measures to reduce Latvia’s dependence on Russian energy resources, NATO and EU membership, moderate state debt level and efficient national economic policy-making justify the preservation of Latvia’s credit rating.
The agency believes the Russian-Ukrainian war increases the risk of a slower growth of Latvia’s open economy,
because the aforementioned conflict has a significant effect on the transport sector. At the same time, the agency adds that the financing available in European Union funds and sustainable state debt level, which remains one of the lowest among countries with a similar credit rating, does help mitigate the factors related to the war and their effect on Latvia’s economy in the medium-term perspective even though the government’s implemented fiscal support provided to reduce the price rise of energy prices caused by the conflict on the national economy and companies and investments into improvement of the country’s security, as well as inflation pressure on the costs of investment projects all contribute to limit options available to reduce budget deficit levels this year. The agency also believes the risks coming from Latvia’s efforts to ensure independence from Russian energy resources are manageable, as is the medium-term growth potential of Latvia’s economy.
«S&P international credit rating agency’s assessment affirms that our country’s energy independence enhancement is an important factor not only in the context of state security, but also maintenance of the country’s creditworthiness and promotion of economic growth in a medium-term perspective. This is an important investments into our country’s future,» stresses Latvian Minister of Finance Jānis Reirs.
The agency adds that increasing Latvia’s credit rating in the medium-term would benefit from economic growth, which would exceed the indexes of countries with similar credit ratings and help reduce budget deficit and the state debt in a medium-term perspective.
The previous report was published on 7 February 2022, when the agency maintained Latvia’s rating at A+ with a stable future outlook, as reported by State Treasury.