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 explains his unchanged assessment for the Czechia in a press release on Friday, among other things, “by returning to stable economic growth, which is 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 indebtedness 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 as scenarios in which there would be a risk of a downgrade. “resulting from a strong dependence on a technologically and regulatory rapidly changing automotive industry “.
Source: CTK
