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BNS - The Standard & Poors rating agency confirmed Estonia's country ratings at the present level of A and A-1, with the outlooks remaining negative.
"The agency says in its decision that strong institutions, as well as the low level of state debts and considerable reserves are keeping the Estonian ratings. Besides, the ratings are supported by Estonia's competitive, flexible and open economy and outlooks of acceding to the euro zone," Bank of Estonia Vice-Governor Marten Ross said.
At the end of February the agency began an extraordinary revision of country ratings, underlining the opportunity of lowering ratings at the end of the process. By its decision made on Tuesday the agency concluded revision of the ratings without changing them.
"In the agency's opinion ending the revision by keeping the level of the ratings reflects the steps the government has taken this year until the present, by which the deficit of this year's budget is contracted by 4.6 percent of the gross domestic product. Continuing improvement of the 2009 budget balance will reduce Estonia's need for external financing and simultaneously increases the opportunity of acceding to the euro zone," Ross said.
The agency pointed out as positive an anticipatory agreements signed between the Bank of Estonia and the Swedish central bank to the tune of ten billion Swedish kronor (EUR 91.5 mln) by which the capability of ensuring liquidity in the currency board system was increased.
Standard & Poors justified leaving the Estonian country ratings outlook as negative by dangers due to the out-of-balance economies of Latvia and Lithuania. Besides, the ratings can later be affected by postponement of accession to the euro zone.
"The clear perspective of accession to the euro zone will significantly increase Estonia's credibility and will in the near future be the main factor of supporting the economy and establishment of country ratings. The agency also pointed out as a threat the condition if Nordic mother banks' financing opportunities or their dedication to the present region should decrease.
"At the same time, S&P found that the Swedish banks' subsidiaries' capital buffer was sufficient in order to cope with loan losses," Ross added.
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