Lithuania wins ratings upgrade from Standard and Poor's

Feb 3, 2010, 15:20 GMT

Vilnius- Rating agency Standard and Poor's said Wednesday it was upgrading its outlook on Lithuania from 'negative' to 'stable,' in a move that will bolster investor confidence in the largest economy in the Baltic states.

'Lithuania has undertaken aggressive fiscal consolidation measures in the wake of the financial crisis. We are revising the outlook on Lithuania to stable from negative,' said a statement from Standard and Poor's issued in London.

'The ratings on Lithuania reflect clear commitment across all political parties to support and implement budgetary and structural policies which anchor the currency board regime and enhance the economy's flexible labor and goods markets,' said credit analyst Frank Gill.

However, he warned that prospects for growth remain uncertain and depend on how rapidly the economy can reorient itself toward external demand and reduce the level of private sector external debt, which is currently equivalent to 60 per cent of Lithuania's GDP.

Giedre Balcytyte, a spokeswoman for Lithuanian finance minister Ingrida Simonyte, told the German Press Agency dpa the upgrade came as a direct result of the reforms that had been implemented by the government of Andrius Kubilius and said she hoped other ratings agencies would follow suit.

'It is clearly as a result of consolidation measures taken by the government in the budgets for 2009 and 2010, which amounted to around 12 per cent of GDP,' she said.