OREANDA-NEWS. August 12, 2011. Standard & Poor's raised Estonia's sovereign rating from A to AA- with the rating outlook being positive, reported the press-centre of Bank of Estonia.

Standard & Poor's Ratings Services states in their decision that they believe Estonia will be able to sustain strong economic growth while maintaining a strong government budget and an improved external position. In addition to favourable growth prospects, the rating agency's decision reflects Estonia's consensus-driven policy framework, great economic flexibility and low general government debt.

According to Ulo Kaasik, Deputy Governor of Eesti Pank, the rating agency's decision shows that the credibility of the Estonian economy has increased. "The ongoing debt crisis in Europe highlights once again the importance of keeping public finances in check. Thus, Estonia must follow its budget strategy and post a consolidated budget surplus in 2013. Moreover, in light of the recent crisis experience, it is necessary to supplement the budget strategy framework in order to hold back expenditure growth in the future," he said.

Standard & Poor's expect Estonia's greatest growth driver over the next few years to be investment growth and a recovery of private consumption. The most material risk to Estonia's growth prospects would be a severe slowdown in our main trading partners.

"After a steep downturn, the Estonian economy has recovered robustly on the back of rising export income. However, vigilance should be maintained towards the external environment, since insecurity about the future continues to be high. As a small and open economy, the improved economic situation should also be used for restoring reserves," Kaasik commented.

The last time Standard & Poor's assessed Estonia's ratings was in April this year, when the outlook was revised to positive and the rating was affirmed at A. Fitch Ratings raised Estonia's sovereign rating last month, from A to A+, and Moody's assessed our sovereign rating in March 2010, affirming it at level A1 Stable.