News

Moody’s Investors Service ("Moody’s") has upgraded the government bond ratings of Lithuania to A3 from Baa1 last Friday (May 8).

The outlook on the rating has been reconfirmed as stable.

“Moody’s decision to upgrade Lithuania is in line with the prevailing trend of how international markets regard our economy and our economic and fiscal policies,” Finance Minister Rimantas Šadžius said in a press release.

In April 2014, Standard & Poor’s raised Lithuania’s credit rating by two notches from BBB to A-, outlook stable, followed by Fitch upgrading Lithunia from BBB+ to A- in June 2014.

Moody’s has named the following key drivers of the rating change: (1) strong resilience of Lithuania’s economy to internal and external shocks; (2) continuation of the government’s successful program of fiscal consolidation; and (3) the further benefits that Lithuania’s recent accession to the euro will bring to the resilience of the economy.

The stable outlook on the rating incorporates Moody’s assumption that policies supporting Lithuania’s economic resilience will be maintained, as well as its important fiscal reforms, even if the overall pace of reform may slow down a little.

The stable outlook also recognizes Lithuania’s resilience to shocks emanating from Russia’s economic contraction and related geopolitical risks.

Moody’s decision will further facilitate Lithuanian Government’s ongoing efforts to restructure its foreign debt, which in March had already shrunk to 34.1% of the national GDP. The tolerated foreign debt limit for a Eurozone member state is 60% of its national GDP.

Later this year Lithuanian Government also plans to borrow additional 3 billion euros to re-finance its outstanding debt accumulated during the years of global financial meltdown, when international markets were lending money with 9% interest rate. Currently one can borrow from the markets at 1-2% interest rate.

Source: Moody’s, Lithuanian Ministry of Finance, 15min.lt