/nginx/o/2017/02/09/6323455t1h0c72.png)
/nginx/o/2011/08/10/702928t1h31d9.jpg)
The rating agency Moody's has affirmed the sovereign rating of Estonia at the current high level of A1.
Moody’s affirms Estonia's rating at A1
Please note that the article is more than five years old and belongs to our archive. We do not update the content of the archives, so it may be necessary to consult newer sources.
Moody's Investors Service says that Estonia's A1 government bond rating with stable outlook is supported by the country's resilient economic growth, moderately high wealth and longer-term prospects for economic convergence with the core euro area. Estonia also tends to score strongly on international governance surveys, and in Moody's view, the country's institutions have demonstrated flexibility and policy continuity over the past four years
Moody's notes that the rating is also supported by the government's track record of fiscal rectitude and low gross government debt, which is forecast at 10.2 percent of GDP this year. Moreover, liquid financial assets equivalent to around 9 percent of estimated 2013 GDP provide a significant financial cushion in times of stress. Another source of credit strength is the fact that the country's banking system is predominantly foreign owned, which reduces contingent liabilities to the government balance sheet.
Estonia's credit challenges stem from the small size of its economy, which is extremely open compared with that of most A-rated peers and which renders it vulnerable to external shocks. Estonia's main long-term credit challenge is its shrinking working-age population due to adverse demographics and emigration, Moody's said.
The stable outlook on the rating incorporates the aforementioned credit strengths and Moody's expectation that its credit metrics will remain within the range of its A1 peers.
The rating by Moody's on Estonia has been stable at A1 since the end of 2002.