Fitch Ratings upgraded Estonia's sovereign rating

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.

Further information:
Viljar Rääsk
Public Relations Office
Telephone: +372 668 0745, +372 527 5055
E-mail: viljar.raask [at] eestipank.ee