Standard & Poor's Rating Services upgrades Estonia's rating

On Thursday, 10 June, Standard & Poor's Rating Services raised Estonia's sovereign rating to A with stable outlook.

According to Ülo Kaasik, Head of the Economics Department of Eesti Pank, the rating agency's decision is a reflection of the increasing credibility of the Estonian economy that arises from the adoption of the euro. It also demonstrates that Estonia's private and general government sector are willing to carry out extensive changes to adjust to new circumstances. At the same time, he said, it is necessary to remain flexible and make sure the fiscal stance will improve in line with the planned schedule.

Standard & Poor's said in their decision that Estonia's accession to the euro area should reduce the exchange rate risk and improve Estonia's access to European capital markets. In addition, the rating agency noted that Estonia has consistently demonstrated the economic, fiscal and labour market flexibility required to function within a monetary union.

According to the agency, the stable outlook refers to Estonia's improving external competitiveness and the willingness to lessen its reliance on external funds.

The last time Standard & Poor's assessed Estonia's ratings was in February 2009, when they upgraded the outlook to stable from negative. Moody's rating to Estonia is A1 with stable outlook. Fitch Ratings has given us the rating BBB+.

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