S&P: Latvia outlook stable

Standard & Poor's said it revised its outlook on the Republic of Latvia to stable from negative and affirmed its BB long-term and B short-term foreign- and local-currency sovereign credit ratings. The BBB transfer and convertibility assessment is unchanged.

The agency said the outlook revision reflects its view of prospects for economic recovery in light of the shrinkage in external imbalances and the government's progress in stabilizing public finances. A significant decline in wages resulted in a meaningful depreciation of the trade-weighted real effective exchange rate, S&P said, and this should restore competitiveness and enable net exports to drive a return to positive growth.

The ratings on Latvia reflect the authorities' demonstrated commitment to support and implement budgetary and structural policies to cope with the effects of the severe economic adjustment and to anchor the fixed exchange rate regime while at the same time safeguarding public finances, the agency said.

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