DBRS assigns A (low) to Latvia

DBRS said it assigned long-term foreign and local currency issuer ratings of A (low) and short-term foreign and local currency issuer ratings of R-1 (low) to the Republic of Latvia.

The trend is stable.

DBRS said the A (low) ratings are underpinned by Latvia’s consensus around stable macroeconomic policy-making, its judicious fiscal management and low level of public debt. The country emerged from the global financial crisis with a more prudent fiscal framework and a stronger banking sector.

Latvia also benefits from membership in the European Union and Euro area, the agency explained.

The crisis, nonetheless, was economically painful and aggravated existing structural challenges that constrain the ratings. These include a labor force still below pre-crisis levels and a high degree of economic informality. Both contribute to the slowing pace of E.U. income convergence.

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