S&P Downgrades Estonia's Long-Term Credit Rating To "A+"

Credit rating agency Standard & Poor's (S&P) has downgraded the credit ratings of Estonia, along with those of Latvia and Lithuania, as a result of threats posed to them by the Russian Federation, Estonia’s public broadcaster ERR reported.

The war in Ukraine and broader regional geopolitical threats in the Baltic Sea region are further expected to affect economic growth, public finances, and competitiveness, in Estonia in the medium term.

S&P downgraded Estonia's long-term credit rating from "AA-" to "A+," while Latvia and Lithuania's ratings, previously each at "A+," have also been downgraded, to "A" in both cases.

According to S&P, both the war in Ukraine and broader regional geopolitical threats in the Baltic Sea region are further expected to affect economic growth, public finances, and competitiveness, in Estonia in the medium term.

While inflation EU-wide peaked at around 9 percent, inflation at its highest point in the three Baltic states rose above 20 percent.

Despite all this, S&P considers the credit outlook for Estonia, Latvia, and Lithuania to remain stable.

This outlook reflects the agency's confidence that the war will not spread beyond Ukraine's territory and affect any NATO member-state. All three Baltic states have been NATO and EU members for 20 years now.