Ljubljana - The Toronto-based rating agency DBRS Morningstar has confirmed Slovenia's credit rating at A (high), noting that the trend on all ratings was stable. The Finance Ministry said on Saturday this was another proof that Slovenia remained a trustworthy country despite the difficult situation.

DBRS Morningstar confirmed Slovenia's long-term foreign and local currency - issuer ratings at A (high) and the country's short-term foreign and local currency - issuer ratings at R-1 (middle). The trend on all ratings is stable.

The agency thus confirmed the ratings for Slovenia from August 2020.

"The confirmation of the A (high) ratings and stable trends reflect DBRS Morningstar's assessment of Slovenia's credible macroeconomic policy framework, even when confronted with the current health and economic crisis."

Covid-19 and the associated restrictive measures have significantly contracted the Slovenian economy in 2020 and deteriorated its public finances, the agency says but notes that Slovenia has seen consecutive years of budgetary surplus before the crisis, which was why it had "ample capacity" to support the economy.

"Slovenia's credit strengths stem from its wealthy and high value-added economy..., its effective debt management and judicious fiscal framework, and its membership of European institutions.

"However, the ratings are principally constrained by the country's still high stock of public sector debt, and the small and open
nature of the Slovenian economy that makes it vulnerable to enduring external shocks."

The agency notes that in the past Slovenia was among the fastest eurozone members to reduce the public debt and deficit. In addition, the country has stable policy-making institutions.

DBRS Morningstar expects Slovenia to see economic revival this year but warns that unfavourable demographic trends are expected to place structural pressure on public expenditures.

Since the start of the pandemic, two of the biggest credit agencies in the world have confirmed Slovenia's credit ratings - S&P at AA- (stable outlook) and Fitch at A (stable outlook). Rating agency Moody's upgraded Slovenia's long-term issuer and senior unsecured bond ratings by one notch to A3 from Baa1, changing the outlook to stable in early October 2020.