Fitch revises Estonia view to negative

Fitch Ratings said it revised the outlook on Estonia to negative from stable and affirmed its long-term foreign-currency issuer default rating at AA-.

“The revision of the outlook reflects a change in Estonia's fiscal stance that has been exacerbated by exogenous shocks. Increased current spending, coupled with emergency measures in response to the Russian invasion of Ukraine, will lead to much larger general government fiscal deficits than in the past,” Fitch said in a press release.

The agency said it forecasts the government debt-to-GDP ratio to continue its climb, reaching 26.6% of GDP by 2026, from 8.6% before the pandemic.

Additionally, Fitch noted the ongoing war between Russia and Ukraine caused it to revise its real GDP forecast to 1.2% in 2022 and 1.8% in 2023 from 4.6% and 4.4%, respectively, at the last rating review in February.

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