Moody's affirms Slovakia's A1 ratings, outlook stable.

By bne IntelliNews January 2, 2012
Moody's Investors Service maintained its 1 ratings on Slovakia with a stable outlook, saying the central European countrys strong economy reflects an impressive real macro and income convergence with the rest of the European Union in recent years. Low wages, high educational attainment and close proximity to core Europe have made the country an attractive focus for foreign direct investment, Moodys said in a statement. The countrys institutions were overhauled in the course of accession to the EU and the EMU, but the institutional reforms lost momentum in recent years, the agency said. Still, Slovakia's high government financial strength reflects a moderate debt burden with a very favorable interest and maturity structure. The economy's susceptibility to event risk is low as concerns remain over the lack of consensus among the electorate and the political elite regarding the reform agenda, the report read. Moodys noted that the risks to Slovakias investment- and export-led growth model have increased in the current environment, characterised by economic slowdown in the countrys main trading partners. The ratings agency warned that any fiscal slippage that would lead to a deterioration of fiscal policy credibility and debt dynamics would be viewed negatively and may lead to ratings downgrade.

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