The agency notes that Latvia has a moderate debt burden and a strong ability to meet its debt obligations, although both of these indicators are likely to deteriorate in the coming years, given the planned increase in defense spending from this year to about 5 percent of gross domestic product (GDP).
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This credit rating is also supported by Latvia’s economic resilience and the government’s experience in effectively shaping policy. However, as the agency explains, due to the small size of Latvia’s economy and its high openness, the country is vulnerable to external shocks.
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