Fitch Ratings has upgraded Slovenia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'A' from 'A-' with stable outlook, the agency said on July 19.

In a previous rating action, Fitch affirmed Slovenia’s rating at ‘A-‘ on February 8.

The improvement was taken as Slovenia’s public debt has improved significantly, as a result of primary surpluses, as well as strong growth and asset sales, the Fitch said in a statement.

Slovenia’s government debt fell to 70.1% of GDP at the end of 2018 from its peak of 82.6%. Fitch expects the ratio to fall further to 64.5% in 2019 and 57.8% in 2021.

The strong GDP growth also led to a substantial improvement in the general government balance in 2018, to a surplus of 0.7% of GDP, from zero in 2017.

The Slovenia posted a GDP growth of a real 4.5% in 2018, with domestic demand being the main driver of growth.

"However, we expect growth to normalise, partly because the  slowdown in some of Slovenia's main trading partners will translate to lower export growth over the next three years, and partly due to above-trend growth reducing spare capacity in the economy," Fitch said in a statement.

Strong budget revenues will keep the budget balance unchanged for 2019, at 0.8% of GDP. Fitch expects similar surpluses in 2020 and 2021.

The combination of primary surpluses, lower interest payments and a lengthening of the duration of the debt stock, currently above nine years, has lowered the country's borrowing requirements.

External finances have improved markedly. Slovenia’s current account surplus remained positive in 2018 for the eighth consecutive year, at 7.0% of GDP.

Slovenia's export growth is expected to slow over the years ahead while solid domestic demand will keep import growth up, which will lead to a narrowing of the current account surplus.

Current account surpluses, which reflect private sector deleveraging, have brought about a substantial fall in external indebtedness, with net external debt declining from 47.7% of GDP in 2012 to 13.7% in 2018.

Slovenia's net international investment position remains negative, at -25.9% of GDP in 2018, Fitch said.