VILNIUS — Ratings agency Fitch upgraded Lithuania’s long-term credit rating from BBB- to BBB+ on Monday, another signal that the hard-hit Baltic state’s economy is stabilizing.
Lithuania is finally seeing the results of painful austerity measures its government put into place at the beginning of the financial crisis. The country’s economic decline bottomed out in the third quarter of 2009 and has slowly ebbed since [private_supervisor]then. Fitch has been encouraged by recent numbers and predicts 1 percent growth in 2010.
“The degree of financial and economic stabilization in Lithuania, as well as the impressive external adjustment of the past year, supports the change in the rating outlook,” said Douglas Renwick, associate director in Fitch’s emerging Europe sovereign team. “Although the fiscal deficit remains high, consolidation measures enacted to date have been substantial and the government has articulated a credible medium-term plan for reducing the deficit to 3 percent of gross domestic product by 2012.”
SEB economist Vilija Tauraitė told Baltic Reports that the upgraded ratings were a sign that the government’s fiscal policies were beginning to work and that outsiders had noticed.
“The Lithuanian government did the right thing in the beginning with the fiscal tightening. Many countries in Western Europe chose the opposite way and debt is becoming dangerous. This was what the credit rating agencies noticed and approved,” Tauraitė said. “It might be painful domestically and to have pensions cut, but it is needed to have prudent fiscal policy,”
Fitch stressed that public finances were a key indicator taken into account in determining credit ratings on Lithuania. According to the agency, the 2009 fiscal deficit was 9.1 percent of gross domestic product. If the government hadn’t taken the necessary measures the deficit last year and would have been 17 percent of GDP, the agency stated.
More to do
The prime minister’s office was pleased by the news of the upgrade, but said more work is needed before they would be totally satisfied.
“This is nice, but it isn’t good enough. We have a lot of hard work ahead of us,” Mykolas Majauskas, an adviser to the prime minister on economic issues told Baltic Reports.
SEB expects the ratings agencies to wait for a few more years before upgrading the country’s rating to its previous high of A. [/private_supervisor] [private_subscription 1 month]then. Fitch has been encouraged by recent numbers and predicts 1 percent growth in 2010.
“The degree of financial and economic stabilization in Lithuania, as well as the impressive external adjustment of the past year, supports the change in the rating outlook,” said Douglas Renwick, associate director in Fitch’s emerging Europe sovereign team. “Although the fiscal deficit remains high, consolidation measures enacted to date have been substantial and the government has articulated a credible medium-term plan for reducing the deficit to 3 percent of gross domestic product by 2012.”
SEB economist Vilija Tauraitė told Baltic Reports that the upgraded ratings were a sign that the government’s fiscal policies were beginning to work and that outsiders had noticed.
“The Lithuanian government did the right thing in the beginning with the fiscal tightening. Many countries in Western Europe chose the opposite way and debt is becoming dangerous. This was what the credit rating agencies noticed and approved,” Tauraitė said. “It might be painful domestically and to have pensions cut, but it is needed to have prudent fiscal policy,”
Fitch stressed that public finances were a key indicator taken into account in determining credit ratings on Lithuania. According to the agency, the 2009 fiscal deficit was 9.1 percent of gross domestic product. If the government hadn’t taken the necessary measures the deficit last year and would have been 17 percent of GDP, the agency stated.
More to do
The prime minister’s office was pleased by the news of the upgrade, but said more work is needed before they would be totally satisfied.
“This is nice, but it isn’t good enough. We have a lot of hard work ahead of us,” Mykolas Majauskas, an adviser to the prime minister on economic issues told Baltic Reports.
SEB expects the ratings agencies to wait for a few more years before upgrading the country’s rating to its previous high of A. [/private_subscription 1 month] [private_subscription 4 months]then. Fitch has been encouraged by recent numbers and predicts 1 percent growth in 2010.
“The degree of financial and economic stabilization in Lithuania, as well as the impressive external adjustment of the past year, supports the change in the rating outlook,” said Douglas Renwick, associate director in Fitch’s emerging Europe sovereign team. “Although the fiscal deficit remains high, consolidation measures enacted to date have been substantial and the government has articulated a credible medium-term plan for reducing the deficit to 3 percent of gross domestic product by 2012.”
SEB economist Vilija Tauraitė told Baltic Reports that the upgraded ratings were a sign that the government’s fiscal policies were beginning to work and that outsiders had noticed.
“The Lithuanian government did the right thing in the beginning with the fiscal tightening. Many countries in Western Europe chose the opposite way and debt is becoming dangerous. This was what the credit rating agencies noticed and approved,” Tauraitė said. “It might be painful domestically and to have pensions cut, but it is needed to have prudent fiscal policy,”
Fitch stressed that public finances were a key indicator taken into account in determining credit ratings on Lithuania. According to the agency, the 2009 fiscal deficit was 9.1 percent of gross domestic product. If the government hadn’t taken the necessary measures the deficit last year and would have been 17 percent of GDP, the agency stated.
More to do
The prime minister’s office was pleased by the news of the upgrade, but said more work is needed before they would be totally satisfied.
“This is nice, but it isn’t good enough. We have a lot of hard work ahead of us,” Mykolas Majauskas, an adviser to the prime minister on economic issues told Baltic Reports.
SEB expects the ratings agencies to wait for a few more years before upgrading the country’s rating to its previous high of A. [/private_subscription 4 months] [private_subscription 1 year]then. Fitch has been encouraged by recent numbers and predicts 1 percent growth in 2010.
“The degree of financial and economic stabilization in Lithuania, as well as the impressive external adjustment of the past year, supports the change in the rating outlook,” said Douglas Renwick, associate director in Fitch’s emerging Europe sovereign team. “Although the fiscal deficit remains high, consolidation measures enacted to date have been substantial and the government has articulated a credible medium-term plan for reducing the deficit to 3 percent of gross domestic product by 2012.”
SEB economist Vilija Tauraitė told Baltic Reports that the upgraded ratings were a sign that the government’s fiscal policies were beginning to work and that outsiders had noticed.
“The Lithuanian government did the right thing in the beginning with the fiscal tightening. Many countries in Western Europe chose the opposite way and debt is becoming dangerous. This was what the credit rating agencies noticed and approved,” Tauraitė said. “It might be painful domestically and to have pensions cut, but it is needed to have prudent fiscal policy,”
Fitch stressed that public finances were a key indicator taken into account in determining credit ratings on Lithuania. According to the agency, the 2009 fiscal deficit was 9.1 percent of gross domestic product. If the government hadn’t taken the necessary measures the deficit last year and would have been 17 percent of GDP, the agency stated.
More to do
The prime minister’s office was pleased by the news of the upgrade, but said more work is needed before they would be totally satisfied.
“This is nice, but it isn’t good enough. We have a lot of hard work ahead of us,” Mykolas Majauskas, an adviser to the prime minister on economic issues told Baltic Reports.
SEB expects the ratings agencies to wait for a few more years before upgrading the country’s rating to its previous high of A. [/private_subscription 1 year]
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