Fitch affirms Czech Republic’s rating at A+, outlook stable

By bne IntelliNews May 16, 2014

Fitch Ratings has affirmed the Czech Republic’s long-term foreign and local currency Issuer Default Ratings (IDRs) at A+ and AA-, respectively with a stable outlook, the ratings agency said in a statement. The issue ratings on the Czech Republic's senior unsecured foreign and local currency bonds are also affirmed at A+' and AA-, respectively. The Country Ceiling is kept AA+ and the short-term foreign currency IDR at F1.

The country’s ratings are underpinned by its strong macroeconomic policy framework, low public and private sector indebtedness and a fairly flexible labour market that has helped to prevent rises in unemployment through the recession, Fitch said. The country’s fiscal deficit and gross debt, at 1.5% of GDP and at 46% of GDP at end-2013, are both below the respective A medians of 2.2% and 52.3%. Private sector debt stands at 72% of GDP, well below the EU’s average of 157%.

Fitch expects the fiscal stance of the new government to lead to a slightly wider fiscal deficit but it should stay under EU’s ceiling of 3% of economic outlook in both 2014 and 2015.  

Improved eurozone outlook, accommodative monetary policy and a renewed public investment drive will help the Czech economy grow 1.9% in 2014, after a two-year recession. Next year, growth should gain speed to 2.5%, according to the ratings agency.

The country’s ratings are also supported by its stable banking sector and the fact that the Czech Republic is a net external creditor.

Fitch, however, warned that due to the fact that the Czech economy has a high degree of openness, it is exposed to external shocks and the volatility of business cycles of its main trading partners.

Fitch would consider cutting the ratings in case of a severe negative growth shock that damages the country's economic and fiscal stability or fiscal slippage leading to a material rise in the public debt ratio. Conversely, higher economic growth could trigger a rating upgrade.

Related Articles

Central European banks eye south-eastern expansion

Banking merger and acquisition (M&A) activity in Central Europe is likely to be further limited by the upturn in the region’s economies, industry sources said in comments published on May 29. ... more

Hungarian PM's "proxy" moves into the nuclear industry as Paks tenders approach

Firms controlled by Hungarian oligarch Lorinc Meszaros have purchased a 51% stake in the Hungarian subsidiary of Czech nuclear ... more

Czech PM accepts new nominee for finance minister

Reducing the political tension in the country a little, Czech Prime Minister Bohuslav Sobotka accepted on May 17 the nomination of a new finance minister from coalition partner Ano. Meanwhile, ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at