Analytics, Investments, Latvia, Rating

Moody's downgraded the foreign and local currency ratings of the government of Latvia from "A3" to "Baa1" mostly because of increasing economic problems, as the agency's experts point out, writes LETA.

Economic downturn will be worse and take longer than was expected, and the government debt will increase significantly in the coming years so Latvia could overcome the problems and prevent a serious economic crisis in the country, Moody's said.

Moody's last cut ratings for Latvia, as well as Lithuania and Estonia, in November 2008, citing fears of an economic slump and possible trouble for banks. The foreign and local currency ratings of the government of Latvia were downgraded to "A3" from "A2".

"The global liquidity crisis will probably cause a shock to the Latvian banking system, which will reverberate throughout the rest of the economy," as Moody's said in a statement last November.