Fitch upgrades Slovenia to A-
The outlooks on the long-term issuer default ratings are stable.
Fitch said on Friday that the "strong fiscal consolidation" had been supported by structural reforms and GDP growth.
It also highlighted the continued reduction of the deficit, driven by the fiscal rule which "supports fiscal discipline".
However, it noted that the new budgetary framework was yet to be tested and its implementation might be affected by delays in the appointment of a new fiscal council.
Debt is expected to continue declining as well given the gradual fiscal tightening.
The state of the banking sector has "improved markedly" following the government-financed bailout, though the sector remained burdened by non-performing loans.
Fitch also noted that the crediting of the private sector was still contracting but was expected to stabilise in 2017.
Touching on the political situation, the agency noted that the diverse coalition had been able to agree some key reforms, but major structural reforms, including on pensions, "seem unlikely to happen in the run-up to the 2018 election".
Fitch also upgraded the rating on senior unsecured bonds to A- from BBB+.
The rating upgrade comes a week after another rating agency, Moody's raised its Baa3 rating to positive outlook.
The last time Slovenia got an A- issuer default rating from Fitch was in August 2012, whereupon it was in BBB+ territory.