On Monday, July 19, Fitch Ratings upgraded Estonia's sovereign rating by two
levels to A;
Stable Outlook was assigned.
Märten Ross, Deputy Governor of Eesti
Pank, says that the rating agency's decision reflects in particular a change in the risk assessment of Estonia's economy due to
becoming a member of the euro area. "According to the agency, Estonia's sound public finances and flexible economy make the country
well-suited for a currency union. Estonia should hereafter aim at maintaining these strengths and guaranteeing the sustainability of public finances
in the context of improved conditions that the currency union provides," added Ross.
In its decision Fitch commented that
joining the euro area improves Estonia's risk profile as it reduces risks associated with external debt and FX lending. Furthermore, becoming a member
of the euro area gives Estonia's banks access to ECB liquidity facilities.
Fitch considers that a difficult but necessary internal
adjustment will continue in the Estonian economy over the medium term. The agency expects an export-led recovery over the medium term.
The
last rating decision by Fitch Ratings was given on March 30 with the Rating Watch Positive. Monday's decision removed the rating from
the Watch List.
On June 10, Standard & Poor's upgraded Estonia's sovereign rating
to A with a Stable Outlook.
On March 31, Moody's lifted Estonia's rating outlook to Stable from
Negative and affirmed the country's rating at A1.
Fitch Ratings' press release is available on
the website of Eesti Pank.
