JCR has increased the credit rating of the Czech Republic
It has upgraded Foreign Currency Long-term Issuer Rating from A+ to AA-, and Local Currency (i.e. CZK) Long-term Issuer Rating from AA- to AA. The outlook has been changed from positive to stable in both cases as a result of improved ratings.
“I see the credit rating upgrade as a positive evaluation of the government’s economic policy and also as a confirmation that our persistent efforts to achieve most efficient and responsible management of government debt are understandable for financial markets”, said Finance Minister Alena Schillerová. On Friday, 20 July, stable outlook for the rating of the Czech Republic, which has consistently been among the five least indebted EU countries, was also confirmed by Standard & Poor’s.
When upgrading the Czech Republic’s rating, JRC took account of the general government budgetary surplus in 2016 (0.7% of GDP) and 2017 (1.6% of GDP), the continuing decline in the debt-to-GDP ratio and the seamless termination of the CNB’s exchange rate floor. It also looks favourably at the emergence of a coalition government which received the vote of confidence in the Chamber of Deputies, which is expected to meet the EU’s fiscal rules.
“The credit rating upgrade by the Japanese agency is sensitively perceived especially by growing Asian markets and by Asian investors whose importance to the world economy is growing”, added Finance Minister Alena Schillerová.
A better credit rating of the Czech Republic’s financial liabilities allows the Ministry of Finance to reduce the cost of servicing the government debt; this also applies to other Czech entities whose credit rating depends on the rating of the Czech Republic as a whole. Last year, for the first time since 2010, net expenditure for government debt servicing dropped below CZK 40 billion. Last week, the Ministy of Finance released a quarterly report on government debt management for Q2 2018, informing that the Czech Republic has managed to conveniently pre-finance the August instalment of the Czech Republic Bond 2003–2018 of 4.60% with a total nominal value of CZK 74.4 billion.
Current credit rating of the Czech Republic by individual agencies:
| Agency | Local Currency Long-term Issuer Rating | Outlook | Foreign Currency Long-term Issuer Rating | Outlook | Rated/confirmed |
|---|---|---|---|---|---|
| Moody’s | A1 | Positive | A1 | Positive | 20.4.2018 |
| Standard & Poor’s | AA | Stable | AA- | Stable | 20.7.2018 |
| Fitch Ratings | A+ | Positive | A+ | Positive | 8.2.2018 |
| JCR | AA | Stable | AA- | Stable | 25.7.2018 |
| R&I | AA- | Stable | A+ | Stable | 2 July 2017 |
| Scope Ratings | AA | Stable | AA | Stable | 26 January 2018 |
| Dagong Global Credit Rating | A+ | Stable | A+ | Stable | 8 February 2017 |
Department 1002 – Press and Foreign Protocol
Published on 25 July 2018, 9:50