Oct 27 (Reuters) – Fitch affirmed Sweden’s long-term local and foreign currency debt rating of “AAA” on Friday, citing the country’s sound public finances and policy framework.
The ratings agency also affirmed Sweden’s outlook at “stable” and kept its short-term foreign currency rating at “F1+”.
“Strong fundamentals, which include a high level of domestic savings and a well-capitalised and profitable banking sector, should help mitigate pressures stemming from the combination of high inflation, monetary policy tightening and the recent decline in real estate prices,” said Fitch in a statement.
Sweden’s central bank had hiked the policy rate at eight consecutive meetings as of Sept. 21 in an effort to tame inflation, slowing growth and saddling many households with higher mortgage payments.
Still, Fitch expects housing prices in the country to recover and grow in 2024. It also sees a broadly balanced budget in 2023 based on weaker macroeconomic demand.
The agency upgraded Sweden’s foreign currency rating to “AAA” in 2004 and it has remain unchanged since.
Earlier this month, Turkish President Tayyip Erdogan submitted a bill approving Sweden’s NATO membership bid to parliament for ratification.
Sweden had applied for a NATO membership alongside Finland last year, following Russia’s invasion of Ukraine. In a historic moment for the alliance, Finland was granted membership in April, but Sweden’s bid had been held up by Turkey and Hungary.
Reporting by Tanya Jain in Bengaluru; Editing by Devika Syamnath
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