RTL Today – Thanks to a “foresighted” policy: Luxembourg’s triple A confirms the solidity of our economy
The rating agencies S&P Global and DBRS Morningstar each confirmed this Friday the “AAA” credit rating of the Grand Duchy of Luxembourg with a stable outlook.
By awarding the highest possible rating to Luxembourg, S&P Global and DBRS Morningstar once again certify the good financial situation of the country thanks to its balanced and forward-looking budgetary approach.
Finance Minister Yuriko Backes comments: “The double confirmation of our “AAA” rating underlines the soundness of the government’s economic and budgetary policy before and during the health crisis. Luxembourg continues to remain attractive for companies and investors despite an uncertain international context. Also, the government is strengthened in the pursuit of its economic policy promoting sustainable growth for the country and its citizens.“
Both agencies find that the pays a demonstrated greater resilience than other countries in the face of the shock caused by the COVID-19 pandemic. The government has supported the country’s economy effectively throughout the health crisis, without jeopardizing the sustainability of public finances. This was made possible thanks to the far-sighted policy of the government and the budgetary room for maneuver created in previous years.
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The solidity of the Luxembourg economy is illustrated by a GDP contraction limited to -1.8% in 2020 against -6.5% on average in the euro zone. In 2021, growth in Luxembourg rebounded strongly to reach +7%. For DBRS, the “AAA” rating also reflects the robust institutional framework of the Grand Duchy, a stable and predictable political environment as well as a strong and developed economy.
Finally, Luxembourg’s rating is based on the fact that the country is well placed to deal with any risks related to the external environment, including in particular the possible impact of changes in international corporate taxation. Any temporary shocks in the financial sector could be cushioned by the diversity of activities within the marketplace. More generally, the maintenance of a relatively low level of public debt represents a safety cushion making it possible to attenuate the materialization of any unforeseen events.