Sun, Jun 05, 2016 - Page 13 News List

Finland’s ‘AAA’ rating cut by a third agency, Moody’s


Moody’s Investors Service on Friday became the third ratings agency to remove Finland’s “AAA” credit rating, saying it sees no improvement in the country’s debt challenge over the coming five years.

Moody’s cut the Nordic country’s rating by one notch to “Aa1” following similar moves by rival rating agencies Fitch Ratings Ltd and Standard & Poor’s (S&P) Ratings Services in 2014 and last year.

The Finnish economy faces weak growth over the coming years that will reduce its resilience to potential shocks, Moody’s said.

Without economic improvement, the agency added, it foresees a deteriorating fiscal position “with no material reversal in the upward trend in the public sector debt burden likely in the next five years.”

Although Finland’s economy resumed growing slowly last year after three years of recession, Moody’s said it expects the country to expand only 1 percent per year over this year and next year.

The country’s debt burden is expected to continue rising from 60 percent of GDP last year to 67 percent by 2018, it said.

“The rise in Finland’s debt load has been material and the measures planned to reverse it are not without challenges, particularly in a low-growth environment,” Moody’s said.

Separately, South Africa held on to its investment-grade credit rating from S&P on Friday, but the ratings agency also maintained its negative outlook, citing low GDP growth.

S&P left its rating “BBB-”, but warned in a statement that its negative outlook reflects “the potential adverse consequences of low GDP growth” and signals “that we could lower our ratings on South Africa this year or next if policy measures do not turn the economy around.”

“Rising political tensions are accentuating vulnerabilities in the country’s sovereign credit profile,” S&P said, but added that Pretoria had shown resolve to reduce fiscal deficits.

The South African National Treasury said S&P’s decision gave it more time to implement economic reforms before another review in December and to expand growth.

Additional reporting by Reuters

This story has been viewed 2388 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top