There was a positive reaction Monday in Estonia to news that London-based ratings agency Fitch had upgraded the Baltic nation's default ratings less than six months before it is due to join the eurozone, according to dpa. Marten Ross, deputy governor of the Estonian Central Bank, said the decision by the ratings agency reflected Estonia's successful bid to join the eurozone and its track record of maintaining strong public finances. "Estonia's future actions should be directed to ensuring that these strengths are maintained along with the improved opportunities brought by monetary union," Ross said. Fitch said in a statement earlier on Monday that it had upgraded Estonia's long-term foreign and local currency Issuer Default Ratings (IDRs) to 'A' from 'BBB+' and 'A-' respectively. At the same time, Estonia's Short-term foreign currency IDR was upgraded to 'F1' from 'F2' and the country ceiling raised to 'AAA' from 'A+'. The upgrades follow formal Ecofin Council approval on July 13 for Estonia's entry into the euro area on January 1, 2011 after it was judged to have met all the Maastricht criteria for euro adoption. "Joining the euro area improves Estonia's risk profile as it reduces risks associated with the country's sizeable external debt," said Fitch's Douglas Renwick, who praised Estonia's "sound public finances and flexible economy." Upon joining the euro area, Estonia will become the poorest of 17 members, Fitch said, though it also noted Estonia's long-term growth prospects are "brighter than average." Estonia's public finances are one of the strongest in the EU. Its track record of fiscal conservatism is underlined by a general government deficit of 1.7 per cent of GDP in 2009 and general government debt of just 7.2 per cent of GDP in 2009 - the lowest in the EU.
