S&P upgrades Slovenia to A/A-1

S&P said it raised its long- and short-term foreign and local currency sovereign credit ratings on the Republic of Slovenia to A/A-1 from A-/A-2.

The outlook is stable.

S&P said the upgrade reflects its expectation that over 2016-2019:

• The general government debt-to-GDP ratio will gradually fall as authorities reduce government deficits and draw down on accumulated deposit assets totaling 18% of GDP in 2015;

• Tax-rich domestic demand will continue its recovery, albeit at a slower pace than in 2015, contributing to ongoing budgetary consolidation;

• Policymakers' measures to restrict expenditure increases will complement efforts to raise tax collection;

• Positive labor market outcomes, both in terms of wage growth and job creation, will persist and in turn support private consumption; and

• Credit conditions will likely gradually ease as the health of the banking and corporate sectors improves over time.

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