Moody’s Upgrades Lithuania's Credit Rating Outlook To Positive


2019 08 26


Lithuania’s long-term rating outlook from stable became positive. It has been upgraded by the international credit ratings agency Moody‘s after the positive assessment of the fiscal policy pursued by the country. Currently, long-term and short-term credit ratings affirmed by the agency (A3 and P-2) remain unchanged. 

The key drivers of the decision to change the outlook from stable to positive are:

1) The continued improvement of Lithuania's fiscal strength, underpinned by gradually declining government debt relative to GDP, improving debt affordability and a reduction of ageing-related fiscal risks;

2) Improving prospects for Lithuania's medium to long term growth potential, supported by significant government structural reform efforts and improving migration trends that support the economy's labour supply

The affirmation of Lithuania's A3 ratings reflects the country's relatively high wealth levels and significant economic flexibility. It also reflects Lithuania's very high institutional strength, which is supported by integration into European and Western institutional structures. The government's fiscal metrics also remain strong compared to similarly rated peers. However, geopolitical risks emanating from Russia continue to be a negative feature of the country's credit profile.

A positive rating outlook demonstrates that the agency is ready to improve Lithuania’s credit rating in upcoming two years, if the economic growth and other monitored indicators sustain a positive trend without strong deviations from the agency’s forecasts. Moody‘s credit rating for Lithuania was last upgraded in 2015.

Currently, international credit rating agency Standard & Poor's (S&P) has given Lithuania a long-term borrowing rating A (stable outlook), and Fitch Ratings A- (positive outlook).

The credit rating agency's press release is available here.