San Marino downgraded by Fitch, Secretary Gatti: “Unexpected downgraded. Too penalized by the difficult international situation”
The Secretariat of State for Finance expresses its thoughts after the publication of the Fitch report on the rating of the Republic of San Marino.
“The Secretariat of State for Finance, examined the report in which Fitch lowers San Marino’s rating to BBreport that is part of a particular international context as it is characterized by events such as the Russian-Ukrainian war, the increase in and the energy crisis dictated by the difficulty of gas supply and high energy costs, requires an analysis that does not agree with some points of the report ”, reads the note of the state secretariat for finance.
And again: “Fitch acknowledges to the Republic of San Marino the improvements carried out by the country such as consolidation of the public budget also in terms of liquidity level, the improvement of the banking system both in terms of capital ratios and liquidity, i balance of payments data referring to foreign accounts that have proven themselves resilient despite the pandemic And the stability of the political system of the country. Despite this, Fitch decides to downgrade the rating due to main external factors that increase the risk on the country, such as the volatility of the international financial markets which could make it difficult or costly to access the market when it is time to refinance the title in 2024, the increase in energy costs and the risk of supplies that could affect and condition the San Marino economy. Finally, the adjustment of the result depends on Fitch structural questions concerning NPLs ”.
“A lot has been done for NPLs – comments the Secretary of State for Finance, Marco Gatti –. At the legislative level, the government has done its part, now we need to speed up securitization. The country must continue to move as it has done so far“.
As for the external elements, Gatti adds: “San Marino has already demonstrated in the management of Covid, as it will demonstrate in the management of the crisis, that it is much more agile and faster than other states in adopting interventions. During the Covid-19 pandemic, San Marino was the only country that really contained the decrease even though catastrophic scenarios were in the offing and has already prepared a plan regarding the energy crisis. Compared to other countries, it has a lower procurement cost because it has moved earlier through financial hedging operations. We therefore believe that the criticisms that Fitch sees on San Marino can be faced and approached as done so far“.
“It deals with – continues the Secretary of State for Finance – of a passing judgment that pays the price of a very difficult general international situation with repercussions that Fitch considers even more stringent and penalizing for San Marino since ours is a small state with an open economy. We are though engaged that the international context improves and that there is time for the country system to adjust a series of indicators that were highlighted before the rollover of the bond “.
Marco Gatti concludes: “We weren’t expecting a downgrade to the system performance that Fitch acknowledged and acknowledged. San Marino is too penalized by these external events which, not only concerning our country, however, find a solution. Being part of the area, San Marino will not be abandoned, I do not divert attention from the next interventions that I must carry out in implementation of the government program and the reform plan that we have long defined ”.