Fitch downgrades Baltics

  • 2009-04-10
  • TBT Staff

The London based agency has again downgraded the Baltics.

RIGA- Ratings agency Fitch has downgraded Estonia,Latvia and Lithuania due to econic troubles and has anegative forecast for the three Baltic states.

Fitch reported having cut Estonia'sdefault rating from A- to BBB+, Latvia'srating from BBB- to BB+ and Lithuania'srating from BBB+ to BBB.

Latvia, now in the midst of a deep recession, is the economically hardest hitin the EU, after seeing several years of outstanding growth after joining theEU.

 "The downgrade of Latvia'sratings reflects the deterioration in the prospects for the Latvian economy andelevated risk of policy slippage" since Riga clinched a 7.5-billion-euro(9.99-billion-dollar) bailout from the International Monetary Fund, the EU andother lenders in December, Fitch said.

The Latvian Finance Ministry said that the ratings downgrade would notaffect the government's plan of stabilization, but that it may negativelyaffect investment.  



Fitch said it expected a 12 percent fall, but now says that the budgetdeficit may rise to 10 percent of GDP in 2009.  


 Estonia,a country of 1.3 million people, posted 10.4-% growth in 2006 and 6.3% in 2007.But output fell 3.6% in 2008 and the government forecasts an 8.5-% slump thisyear.

 It would seem that the crisis in Latviais initiating a domino effect, reports Fitch, who decided to downgrade Estonia and Lithuaniadue to speculative fears that they might be hit by the same crisis being soclosely tied to Latvia.

Fitch reports a ten percent contraction for both Estoniaand Lithuania.