Fitch, a leading credit rating agency, has raised Ireland’s credit rating to AA, the highest it has been since 2009. The announcement came on Friday, indicating a minuscule risk of default and a strong fiscal ability to meet financial obligations. Fitch’s analysts, led by Greg Kiss, credited this upgrade to Ireland’s cautious domestic fiscal framework. The framework is intended to counterbalance risks from their large and highly-focused windfall corporate tax gains. The government’s self-set yearly spending growth limit of 5% also played a part. Even though the government plans to increase spending by nearly 6.1%, Fitch does not foresee significant changes in fiscal policy regardless of the composition of the next government.
The enhancement in Ireland’s credit rating is an indication of ongoing global faith in the Irish economy. It is also likely to have a potential effect on the country’s future bond sales borrowing costs. Fitch is the second prominent rating agency after Standard & Poors to elevate Ireland’s credit rating to AA. On the other hand, Moody’s rating for Ireland currently stands at Aa3.
Dave McEvoy, the director of funding and debt management at the National Treasury Management Agency, which oversees Ireland’s debt, sees this as another feather in Ireland’s cap. Multiple crucial factors like a better debt position, prefunded cash reserves, long average maturity, and lower refinancing needs bolster the upgrade. Similarly, Michael McGrath, Minister for Finance, hailed this as a demonstration of their robust economy and the government’s balanced, sustainable approach to budget policy.