Updates: 27.06.2021 17:48
London / Prague – The international rating agency Fitch Ratings has once again confirmed the Czech Republic’s credit rating at AA-. The Czech Republic’s rating reached this level as early as 2018. As in January, the rating outlook is stable, which means that Fitch is not going to change it in the foreseeable future.
A credit rating is an important guide for investors, as it shows them the likelihood of properly repaying loans. It has a significant effect on the willingness of creditors to lend to the State or another entity concerned, as well as on the terms of the loan, such as the interest rate. The higher the rating, the better the borrower perceives them in the eyes of creditors and the more likely he is to be able to secure cheaper loans.
Fitch its unchanged rating for the Czechia on Friday press release explains, inter alia, “the return to stable economic growth, supported by vaccination and pandemic control”. Despite the unexpectedly “expansive” short-term tax policy, the agency expects the Czech authorities to return the government debt ratio to a “downward trajectory” in the medium term.
“The Czechia thus shows the same degree of reliability of its debt as Belgium, the United Kingdom or Estonia, which is the least indebted EU country,” commented Lukáš Kovanda, an analyst at Trinity Bank. According to him, Fitch sees possible longer periods of unbridled budgetary policy and failure to meet the challenges “resulting from a strong dependence on a rapidly changing automotive industry” as scenarios that would threaten a downgrade.
Source: České noviny – hlavní události by www.ceskenoviny.cz.
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