Fitch Ratings said it has affirmed Slovakia's long-term foreign and local currency issuer default ratings (IDR) at A+. The outlook is with stable. The issue ratings on Slovakia's senior unsecured foreign and local currency bonds have also been affirmed at A+, the country ceiling has been affirmed at AAA and the short-term foreign currency IDR at F1.
Fitch noted that the ratings have been affirmed as Slovakia's economic growth is expected to continue outperforming the eurozone average, forecasting the GDP growth at 2.4% for 2014, higher than the expected Eurozone average of 0.9%.
According to Fitch, Slovakia’s macro-prudential framework is sound with a solid banking sector and low level of private sector indebtedness. The country’s current account is expected to remain in surplus in 2014-2015, boosted by an improving trade surplus. The rating agency also forecasts that the general government deficit will remain below the Maastricht threshold of 3.0% of GDP this year, at 2.8%, slightly higher from 2.6% in 2013. However, the country is relying on one-off rather than structural measures. Fitch also forecasts that general government debt will end up in 2013 at around 55% of GDP, below Slovakia's self-imposed constitutional debt threshold of 57% of GDP.
Slovakia’s ratings could be affected negatively if the government fails to implement credible fiscal consolidation that would stabilise and ultimately reduce the public debt-to-GDP ratio. Severe negative growth shock from the eurozone that damages economic and fiscal stability could also affect the ratings, Fitch said.
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