THE CREDIT RATINGS agency, Moody’s, has upgraded Ireland’s sovereign rating from negative to stable. However, Moody’s continues to apply a junk rating to Irish government bonds.
Moody’s has been the most negative ratings agency when it comes to Ireland’s financial outlook, but this is seen as a positive step forward for Ireland and is fueling hopes of an upgrade before the country exits the EU-IMF bailout later this year.
Moody’s stated that the upgrade to Ireland’s outlook was due to a number of elements such as the government’s progress in restoring solvency to its public finances, the improvement of the debt and deficit position and the reduced risks of Ireland losing access to the financial markets.
They said that the country now had a reduced risk of losing access to financial markets because of an improvement in its liquidity.
The upgrade comes just two days after the announcement that Ireland has technically exited recession, with CSO figures showing the economy reversed three consecutive quarters of GDP contraction, growing by 0.4 per cent.
Despite the upgrade, Moody’s warned against easing off on austerity measures, stating:
“Downward pressure would develop on Ireland’s government rating … if the country’s fiscal consolidation process were to falter”.
The National Treasury Management Agency (NTMA) said while it is pleased that the outlook on the rating has been changed, “it is disappointed that Moody’s did not see fit to upgrade the rating from its current Ba1 sub-investment grade rating to investment grade”.