By Sergio Goncalves
(Reuters) -Ratings agency Fitch on Friday upgraded Portugal’s rating to “A” from “A-“, citing sustained debt reduction, a balanced fiscal position and continued external deleveraging.
The agency said Portugal’s public finances have improved due to steady primary surpluses and a consistent fiscal framework. Strong cash buffers and a predominantly fixed-rate debt profile have also bolstered the country’s resilience to market volatility.
Portugal’s finance ministry said in a statement that Fitch’s decision recognizes the country’s efforts to “promote economic growth, ensure balanced public accounts, and achieve a sustained reduction in public debt.”
“As the rating determines how the country is perceived by foreign investors and determines its financing costs, this second rating upgrade is excellent news,” it said.
Portugal’s economy rebounded in the second quarter, helped by private consumption and exports, including a 0.2% rise in services in the key tourism sector, reversing a 0.4% decline in the previous quarter. GDP grew 1.9% year-on-year, an acceleration from the 1.7% registered in January-March.
S&P Global last month raised Portugal to “A+” from “A” and set a stable outlook, citing continued external deleveraging and economic resilience, with tourism and investment supporting growth. Moody’s Ratings maintained Portugal at “A3”, two notches below S&P’s rating.
Portugal’s quarterly growth, along with that of its largest trading partner, Spain, contrasted with contractions of the larger European economies of Germany and Italy.
Fitch affirmed Portugal’s outlook at “stable”.
(Reporting by Khusbu Jena, Sérgio Gonçalves and Andrei Khalip; Editing by Alan Barona)
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