Portrait of an Ascending Sovereign Credit
Latvia's Credit Ratings are stable in A category
Rating agencies acknowledge flexibility of Latvia's economy, moderate level of government debt and prudent fiscal
management as key factors bolstering its creditworthiness.
Long-term Foreign Currency Rating Development
S&P (A+ Stable)
A+/A1
A/A2
A-/A3
BBB+Baa1
BBB/Baa2
-Moody's (A3 Stable)
Fitch (A- Stable)
BBB-/Baa3
BB+/Ba1
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Key Strengths of Latvia's Sovereign Credit Profile
Resilience to the Covid-19 shocks, diversity and growth of the Latvian
economy in previous years
Key Risk Factors of Latvia's Sovereign Credit Profile
•
Persistent possibility of geo-political tensions
•
•
Predicted growth rate of the Latvian economy after the mitigation of
Covid-19 pandemic
.
•
Relatively low government debt to GDP level and moderate burden of debt
service
Record of fiscal consolidation and implementation of structural reforms,
effective policymaking
Membership of large international organizations and unions (EU, NATO,
OECD, etc.)
Government's achievements in reduction of risks in financial sector
Source: S&P, Fitch and Moody's
Latvia is a small and open economy, making it vulnerable to external
shocks
Latvia's challenges in demographic outlook and labour market, as well as
comparably low income level
Reputational risks in financial sector remain
Low GDP per capita compared to other EU countries and higher level of
net external debt
Risk of structural shocks to the key sectors or weakening of international
competitiveness
More material and longer impact on economy from the Covid-19 pandemic
and inability to reduce government debt to GDP level after mitigation of
Covid-19 pandemic
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