Fitch Affirms Luxembourg Triple A Rating, Stable Outlook

SmartForexNews

MT5-Fitch Ratings affirmed Luxembourg's top notch credit rating on Tuesday citing its developed, ultra-open economy, high income, strong public balance sheet and net external creditor position.

The country's long-term foreign and local currency Issuer Default Ratings (IDRs) was affirmed at 'AAA', Fitch said in a statement. The outlooks on the IDRs are Stable.

The growth slowdown that began since the fourth quarter of 2011 after a strong rebound from the 2008-09 financial crisis is likely to continue. Yet, the economy has outperformed its neighbor Germany, which is the biggest in the euro area, Fitch pointed out.
The agency expects Luxembourg's economy to stagnate this year and have a gradual recovery from 2013 onwards.

Luxembourg has the lowest general government debt among Triple A rated sovereigns at 18 percent of GDP, Fitch said. The country has to address sizeable contingent liabilities in the pension system, which if delayed could have an adverse impact on longer-term fiscal sustainability, the rating agency warned.

Fitch said that further structural measures will be needed on top of the existing 1.2 percent of GDP consolidation plans, effective from 2013, for Luxembourg to reach the medium-term objective of 0.5 percent of GDP structural surplus, which would set the debt/GDP on a declining trend.

Published: 2012-09-25 11:01:00 UTC+00 1 hour, 47 min. ago