Fitch Ratings affirms Lithuania's 'A' credit rating

International credit rating agency Fitch Ratings has reaffirmed Lithuania's previously assigned long-term debt rating of "A" and maintained a stable outlook, according to the Ministry of Finance.

„Despite Lithuania's small and open economy and the persistence of geopolitical risks, our country maintains a high credit rating“, –  the report quoted Finance Minister Kristupas Vaitiekūnas as saying.

„One of the most frequently cited reasons for this – adherence to fiscal discipline. Therefore, despite growing defence needs, it is important to maintain fiscal discipline – it is also important to maintain the country's high credit rating, which leads to a favourable cost of borrowing–, – he said.

According to the ministry, the agency's analysts say that Lithuania's „A“ rating reflects the country's sound political system, underpinned by its membership of the European Union (EU) and the eurozone, low government debt, prudent financial management and governance indicators above the median of similarly rated countries.

According to experts, these advantages are counterbalanced by the high exposure to geopolitical risks, the small size and openness of the economy, and the lower gross domestic product (GDP) per capita compared to similarly ranked countries.

„Fitch Ratings“ forecasts that the general government fiscal deficit will widen to 2.7% of GDP in 2025, broadly in line with the average of „A“ rated countries and  2.9% and and reflects increases in military and current spending.

According to the ministry, the agency's analysts believe that higher fiscal deficits and large stock-flow adjustments will increase public debt to 50.6% in 2027, compared to the average of „A“ rated countries – 55.5%.

They also note that the country's GDP growth, which is expected to reach 3% in 2024, will slow to 2.6% this year – the level of the median of „A“ countries, before accelerating again next year to 3.2%, reflecting an increase in private consumption, driven by the planned withdrawal of funds from the second pillar of the pension system.

Credit rating – an indicator that provides investors with concentrated information on the level of a borrower's ability to meet its financial obligations. A high credit rating indicates a lower risk of default by the borrower and a correspondingly lower cost of borrowing.

„Fitch Ratings“ is part of a group of three major credit rating agencies, including „Moody's Investors Service“ and „S&P Global Ratings“.