Rating agency stays steady on Latvia

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On Friday, September 20, the credit rating agency S&P Global Ratings reaffirmed its ‘A’ long-term foreign currency sovereign credit ratings on the Republic of Latvia with a stable outlook, said the Latvian Stte Treasury (Valsts Kase) in a newsletter released September 26.

"In [the] agency’s view economic growth will moderate at slightly below 3 % and remain resilient over the next years, At the same time external risks to the economic outlook remain but those are indirect," said the Treasury.

"[The] Agency believes that in spite of high degree of fragmentation in government there will be policy continuity and fiscal deficit will narrow further, in the same time acknowledges there is limited space to expand spending in the health care and education sector and social expenditure while addressing reforms needed," it added.

In its report S&P Global Ratings draws particular attention to the financial sector of Latvia and notes that the Latvian authorities have made significant efforts in regards to strengthening the regulatory framework regarding anti money laundering (AML) and financial crime prevention, increasing supervisory capabilities, reducing deposits of non-residents and implementing comprehensive reforms in financial sector.

However, the agency notes that should the country be included on the FATF gray list, further reputational impairments for the broader Latvian financial sector cannot be ruled out and could bear implications for financial stability and negatively affect further growth of Latvian economy.

The previous credit rating agency’s S&P Global Ratings announcement was published on March 22, 2019, when the agency affirmed Latvia’s credit rating at ‘A’ with a stable outlook.

The Treasury also reported that on Wednesday, 18th September, domestic government T-Bonds were offered due on 31 January, 2025 with the total nominal value of 24 million euros. The total demand reached 94.5 million EUR and exceeded the amount offered 3.94 times.

The T-Bonds due on 31 January, 2025 with the total nominal value of 6 million euros were sold in a non-competitive fixed rate auction. Total demand reached 36.001 million euros.

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