Moody's cuts Lithuania view to negative

Moody's Investors Service said it changed the outlook on the government of Lithuania's A2 local- and foreign-currency debt ratings to negative from stable. The outlook on the A2 foreign-currency deposit ceilings also has been changed to negative. The outlook on the Aa1 country ceiling for foreign-currency debt remains stable.

The change in Lithuania's outlook was precipitated by the worsening economic slowdown, which is likely to be amplified by the impact of the global liquidity crisis on the small, open economy, Moody's said.

The negative impact on the economy and financial system will probably cause a larger and longer-lasting impact on the government's balance sheet than previously assumed, resulting in deterioration in the government's credit metrics relative to peers, the agency said.

There is growing evidence that Lithuania will experience a difficult economic adjustment that could last several years, Moody's added.

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