On Tuesday, 21 April, the rating agency Standard & Poor's decided to affirm Estonia's ratings at A/A-1 with the outlook remaining negative.

"The agency notes in their decision that Estonia's sovereign ratings are supported by strong institutions, low levels of government debt and substantial fiscal reserves. In addition, the ratings reflect the country's competitive, flexible and open economy, as well as the prospects for joining the euro area," said Deputy Governor of Eesti Pank Märten Ross.

At the end of February S & P placed Estonia's ratings on CreditWatch, speaking of the possibility of downgrading them after two months. However, the rating agency decided this Tuesday to remove Estonia from the CreditWatch and leave the sovereign rating unchanged.

"Standard & Poor's decision reflects the recent government measures to cut this year's fiscal deficit by 4.6% of GDP. Continuous budgetary consolidation during 2009 will reduce Estonia’s external financing needs and improve prospects for joining the euro area," Ross noted.

The rating agency highlighted as a positive factor the precautionary swap arrangement of SEK 10 billion entered into by Eesti Pank and Sveriges Riksbank, since this increases Eesti Pank's capabilities to provide liquidity under the currency board arrangement.

According to Stanndard & Poor's, Estonia's negative outlook reflects risks arising from the unbalanced economies of Latvia and Lithuania. In addition, Estonia's ratings may also be affected by significant delays in the EMU membership. "The clear perspective of joining the euro area increases markedly Estonia's credibility and serves as the main factor supporting our economy and determining our sovereign ratings in the near future. The agency highlighted as a risk also any weakening in the commitment or funding access of the Nordic parent banks. At the same time, S & P is of the opinion the capital buffers of the local subsidiaries of Swedish parent banks are sufficient to cope with loan losses," added Ross.