PRAGUE: Standard & Poor's ratings agency on Wednesday raised its long-term foreign sovereign credit rating for the Czech Republic to 'AA-' from 'A'.
"We also raised the long-term local currency rating to 'AA' from 'A+' and the short-term foreign and local currency ratings to 'A-1+'," an S&P statement said. "The outlook is stable," it added.
S&P said the upgrade was due to a revision of its rating criteria which put a greater weight on central governments' political and economic profile.
The ratings agency praised Prague for "its prudently managed and balanced economy (...) characterised by low levels of foreign borrowing, a deposit-funded banking sector with minimal lending in foreign currency" along with a sound monetary policy fostering low inflation and interest rates.
"We expect continued prudent management of the economy over the ratings horizon," S&P said, adding the Czech the debt profile was favorable.
"Restrained fiscal policy before the crisis means that general government debt is relatively moderate, at 38.5% of GDP in 2010," it noted, adding that general government debt is expected to "stabilise at 45% of GDP in 2014, and decline thereafter."
According to S&P, growth in the Czech Republic's small "competitive and open" economy was closely linked to external demand, particularly in major trading partners like Germany.
However it noted "the floating exchange rate would also serve as a useful
Copyright AFP (Agence France-Presse), 2011
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