Fitch pinpointed that the upgrade reflects the steady fiscal revenue as well as the prudent fiscal policy that the country has been following since the 2013 crisis.

It was noted:

“We forecast the fiscal surplus will remain high at 2.4% and 2.2% of GDP in 2019 and 2020, respectively, compared with 3.1% and 2.9% targeted in the 2019 Draft Budgetary Plan. Robust economic growth will boost fiscal receipts, while previously adopted hiring freeze and collective agreements will likely limit growth in the wage bill.”

Moreover, the agency noted that the ratio of non-performing exposures (NPEs) to total loans fell to 40.3% in the first half of the year from 44% last year.

Household and corporate debt has also experienced a decline as a result of a high GDP growth, debt-to-asset swaps and loan write-offs.

The rating agency highlighted:

“We expect private sector deleveraging will accelerate, however, as enforcement of new legal amendments, improving earnings and recovering house prices foster debt repayment. Economic growth will likely remain resilient to a faster resolution in NPEs as rising wages, a dynamic labour market and high household savings will help preserve disposable income and smooth consumption.”