After global markets closed today, Moody’s rating agency upgraded its rating for the long-term debt of the Czech Republic to the excellent Aa3 with stable outlook.
This year several important agencies with international reach have already confirmed their existing high ratings for the Czech Republic, yet this year is the first time there has been an actual rating upgrade. This is a strong signal for global financial markets that the Czech Republic is a more trustworthy and more stable partner.
Moody’s states that the key factor in the rating upgrade is the positive influence of fiscal strength indicators, supported by a growing economy, healthy public finances and a strong institutional framework. It also praised the government reforms focusing on increasing added value in industry and supporting innovation across sectors, which will improve economic resilience.
“This rating is an important guide for investors, showing them how various states are doing in economic terms and how risky any given state is for them. And the higher a state’s rating, the more it is considered a reliable debtor, meaning it can then borrow in the market under more favourable terms. This means that we can save a significant amount of money when financing the state debt, which we can then use where it is needed most. For example on pensions, salaries for nurses, science and research, road repairs and on modernising hospitals,” said Finance Minister Alena Schillerová.
The agency anticipates that the ratio of government debt to GDP will continue to fall in 2019 and 2020. According to Moody’s, it should reach 30.8% by the end of 2020 and could fall to under 30% by 2023.