Moody's says the programme's (P)Baa2 ratings are in line with Latvia's long-term issuer ratings of Baa2. The long-term issuer rating carries a positive outlook. Moody's expects to assign a Baa2 on long-term notes issued under the programme upon review of final documentation.
Moody's upgraded Latvia's ratings on 15 March.
The key drivers for the rating action were:
(1) the country's strong, resilient and balanced economic recovery and its positive medium-term growth prospects
(2) the significant improvement in Latvia's public finances and the resulting stabilising of government debt and expected reversal in 2014
Moody's moderate assessment of Latvia's economic strength balances the economy's relatively modest wealth levels and economic dynamism with its small size and history of volatile economic growth.
After a substantial contraction in 2009 following the onset of the global financial crisis, the economy experienced a stronger-than-expected growth of 5.6% in 2012 and the rating agency estimates that growth will remain one of the highest in the EU at 3.8% in 2013.
The economy has regained its competitiveness and activity is moving into the tradeable sector, particularly manufacturing, which is also having positive effects on domestic demand.
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