Moody's affirms Slovakia

Moody's Investors Service said it affirmed Slovakia's foreign-currency and local-currency government bond ratings at A1.

The outlook is stable.

In a new report, Moody's said Slovakia's ratings reflect its deep economic and financial integration with core Europe that facilitates income convergence and its moderate government debt ratios, high debt affordability and a captive, albeit underdeveloped, domestic debt market.

These strengths sufficiently counterbalance competitiveness challenges due to export concentration, labor market rigidities, an aging population and negative debt dynamics resulting from large fiscal imbalances, the agency said.

Slovakia's high economic strength assessment reflects the economy's impressive real macroeconomic convergence with the rest of the European Union in recent years, Moody's said.

The country's high government financial strength reflects favorable debt dynamics, albeit with meaningful deterioration since the global economic crisis hit, the agency added.

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