Page 31 - Central & Southeast Outlook 2020

dynamics are limited by low financing costs,” Fitch Ratings said in October.
The European Commission expects that the ratio of government debt to GDP, estimated at 36.4% in 2018, is forecast to decline to 32.9% by 2021, as nominal GDP growth outpaces the government’s net borrowing. Debt is forecast to come in at 35.2% of GDP in 2020, a drop of 0.8pp versus 2019. SEB predicts debt to GDP ratio at 34.9%.
Latvia’s debt rating is at A- with stable outlook (Fitch, last updated in October 2019), A with stable outlook (S&P, last updated in March 2019) and A3 with stable outlook (Moody’s, last updated in May 2019).
4.5 ​Debt - Lithuania
Lithuania’s government debt is ​modest and has been on a downward trend since 2015.
The European Commission expects the debt-to-GDP ratio to remain “rather stable” in the next few years. Lithuania has already accumulated pre-financing in preparation for a bond redemption in early 2020, slightly raising the debt-to-GDP ratio to 36.3%, up from 34.1% in 2018. “The positive effect of the scheduled bond redemption is set to be somewhat counterbalanced by a continuous accumulation of necessary funds for the same exercise in 2021 and 2022,” said the European Commission in its 2019 Autumn Report.
Rating agency Fitch forecasts general government gross debt (GGGD) to increase to 37% of GDP in 2019, reflecting the pre-financing of the bond maturing in February 2020, before falling to 35.1% of GDP by 2021 due to sustained primary surpluses.
Fitch noted when affirming the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A-' with a Positive Outlook in August 2019 that Lithuania has a favourable debt structure and dynamics are relative to its peers, with lower interest payments (2.6% of government revenues against the current A median of 4.0%)) and long maturities (a weighted average maturity of 8.0 years).
31​ CESE Outlook 2020​ ​ ​www.intellinews.com