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The credit rating agencies are working.
Confirmed stable unchanged outlook for the Czech Republic is paramount AA less / A-1 more Sovereign rating from Standard & Poor’s.
According to an analysis of the international credit rating presented in London on Friday night, the Czech economy will sink into a severe recession this year, but several years of growth and a solid state of public finances will provide effective protection against the effects of the epidemic.
In its analysis to confirm the rating of Czech sovereign debt, Standard & Poor’s stated:
- expects the Czech Republic’s gross domestic product (GDP) to fall 8.6 percent this year as a whole due to the coronavirus epidemic
- the Czech general government deficit as a percentage of GDP will reach 7% by the end of the year
- the epidemic did not initiate the external balance of the Czech Republic, the usable reserves of the Czech central bank are close to $ 160 billion
- Tight fiscal policy in recent years has kept net public debt on a downward path, falling below 20 percent of GDP at the end of 2019
- the Czech government’s net debt-to-GDP ratio is stabilizing at just over 30% despite the epidemic, which remains a low level of debt by international comparison.
Another credit rating, Fitch Ratings, confirmed Romania with a negative outlook unchanged BBB minus, that is, a sovereign rating recommended by investors.
Fitch emphasized: The negative outlook for the rating reflects the weakening of public finance metrics due to the procyclical policy of recent years and the economic and budgetary implications of the coronavirus epidemic.
Fitch Ratings highlighted:
- Romania’s general government deficit relative to gross domestic product will rise to an all-time high of 9.5 percent by the end of this year.
- The public debt-to-GDP ratio will rise from 35.3 percent last year to 45.9 percent this year and 50.7 percent by 2022.
- however, it will continue to have a lower level of debt BBB the median value of registered sovereign debtors in the band, which is currently 52.7 percent
- however, the expected path of public debt for the period 2019-2022 is better than the 22 percentage point increase measured during the financial crisis of 2008-2011.
Top image: Andrej Babis, Czech Prime Minister, Brussels, October 16, 2020
Kenzo Tribouillard / POOL / AFP
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