Scope Ratings upgrades Lithuania’s debt rating and outlook after 4 years
On Friday evening, the international credit rating agency Scope Ratings upgraded Lithuania’s long-term debt rating from ‘A’ to ‘A+’ and revised the outlook from positive to stable. Our country’s rating was last upgraded by Scope Ratings in 2021.
According to the agency's experts, the increase in Lithuania's credit rating was driven by sustained growth of the country's economy, resilience to external factors and stable fiscal outlook. Scope Ratings analysts, in their report, highlight one of the lowest levels of general government debt in the euro area, sizeable European Union funded public investments.
“A higher rating granted strengthens our country's credibility in international markets, but at the same time obliges to maintain the financial discipline and to pursue a responsible economic policy”, Vice-Minister of Finance Darius Sadeckas says.
In the report, Scope Ratings highlights the country’s strong economic performance. Last year, Lithuania's GDP per capita reached 63% of the euro area average (by 22 percentage points more than in 2015), while measured in purchasing power standards, GDP per capita was 84% of the euro area average (by 14 percentage points more than in the same period).
According to analysts, Lithuania's economy grew 2.8% last year, influenced by a high private sector demand and a strong services sector. They expect the country's GDP to grow 3% this year and 2.9% next year. This will be underpinned by resilient household consumption, supported by strong labour market conditions and wage growth, as well as a recovery in private investments, in particular, in construction of residential housing.
Scope Ratings experts point out that exposure to external shocks remains the main risks, given Lithuania’s small size economy, still comparatively moderate income levels and borders with Kaliningrad and Belarus. Risks also include adverse demographic trends and high defence spending commitments, which will put long-term pressures on the fiscal trajectory.
The latest report by the credit rating agency Scope Ratings can be found here.
It should be noted that at the end of May this year the international credit rating agency S&P Global Ratings confirmed Lithuania’s previous long-term debt rating ‘A’, with a stable outlook. Lithuania’s rating was last reviewed by Standard & Poor’s agency’s analysts in May 2024, issuing ‘A’ (stable outlook) and leaving a valid ‘A-1’ short-term debt rating, and last December only published a report on Lithuania assessing the country’s economic outlook.
At the beginning of May, the international credit rating agency Fitch Ratings confirmed a rating ‘A’, with a stable outlook, granted to Lithuania. Lithuania’s credit ratings were last upgraded by this agency in January 2020, when the long-term debt rating was upgraded from ‘A-’ to ‘A’.
In mid-April, Moody’s published a report on Lithuania – the agency’s analysts view Lithuania’s situation as stable, therefore, the decision was made not to change the rating currently assigned to the country (A2, with a stable outlook). Moody’s last upgrade of Lithuania’s debt ratings was in February 2021, when a long-term debt rating ‘A3’ (positive outlook) issued in 2015 was upgraded to ‘A2’ (stable outlook).
More information about Lithuanian credit ratings can be found here.
Additional information:
A credit rating is an indicator that provides investors (creditors) with concentrated information on the degree of ability of the borrower to meet its financial obligations. A high credit rating indicates a lower risk of default by the debtor/issuer and, accordingly, a lower cost of borrowing.
They use specific classifications and symbols to express credit ratings and determine the credit value for borrowing countries and companies by using standardised credit ratings.