LATVIA – GLOBAL RATING
According to the National Audit Office, International credit rating agency «S&P Global Ratings» has affirmed Latvia’s credit rating, changing the future credit rating assessment from stable to negative.
When analysing Latvia’s economy, the agency recognises that Russia’s protracted military action in Ukraine and high inflation increase risks to Latvia’s growth and competitiveness as a small and open economy, and create direct and indirect costs to the economy and the state budget.
The Agency also sees the negative impact of Russia’s active military operations in Ukraine in other countries similar to Latvia with small and open economy, for example, most recently on December 2, 2022 S&P Global Ratings changed Lithuania’s credit rating outlook from stable to negative.
However, the agency stresses that the effective use of funding available under EU funds for public infrastructure investments and measures that will promote a course of reform and digital transformation in various areas will reduce the risk impact of the Russian-Ukrainian military conflict, providing support for economic growth in the medium term.
The agency also notes that although fiscal support to compensate for soaring energy prices and investments in ensuring the country’s energy independence will make the process of reducing Latvia’s budget deficit somewhat complicated, nevertheless the agency praises Latvia’s effective fiscal policy implemented in recent years as thought-out solutions for strengthening energy security.
According to the agency, moderate level of national debt of Latvia, membership in NATO and Eurozone, as well as ability of Latvian economy to adapt to various challenges are the main factors keeping the credit rating unchanged.
See the full publication at https://www.spglobal.com/en/ S&P Global Ratings (registration required).