Fitch Ratings revised Estonia's sovereign rating from positive to stable

As expected, the rating agency Fitch Ratings adjusted the outlook on Estonia's sovereign rating from positive to stable. The rating was maintained at level A.

"The evaluation of Estonia’s economy is still positive. However, Fitch considered it necessary to adjust the rating outlook. This is based on the agency's opinion that Estonia will not join the euro area before 2009-2010," commented Andres Lipstok, Governor of Eesti Pank.

According to Lipstok, Fitch's view confirms Eesti Pank's estimate that it will be complicated to adopt the euro in 2008 due to the non-compliance of Estonia's inflation rate with the Maastricht inflation criterion. However, there exist no threats to our price stability as it was also confirmed by the IMF mission that visited Estonia just recently.

"Further developments of the rating and its outlook will be dependent on Estonia's credibility in the eyes of foreign investors. If euro adoption is postponed, even more prudent economic and monetary policies will have to be pursued to maintain the reliability of Estonia's economy," Lipstok emphasised.

Compared with other new EU Member States, Fitch has rated Slovenia and Cyprus higher than Estonia. The Czech Republic, Malta and Slovakia are on the same level with us.

In July Estonia's rating was revised to stable from positive by the agency Standard & Poor's.