S&P lifts Slovenia

Standard & Poor's said it raised its long-term foreign currency sovereign credit rating on the Republic of Slovenia to AA from AA-.

At the same time, the AA long-term local currency and A-1+ short-term foreign and local currency ratings on Slovenia were affirmed.

The outlook is stable.

S&P said that the convergence of the foreign and local currency ratings at the AA level follows the decision of the European Commission and European Central Bank that Slovenia should join EMU on Jan. 1, 2007.

Slovenia's very strong credit standing reflects the government's impressive achievement in reducing inflation to within the Maastricht treaty target for EMU entry and also its tight control of fiscal accounts, the agency noted.

The agency added that the ratings on Slovenia have thus far been constrained by its hesitant approach to the reforms necessary to underpin further growth without jeopardizing the fiscal stringency of recent years.

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