The agency thus confirmed that Slovenia remains a trustworthy country for investors even in these challenging times. As credit rating agencies downgrade or maintain the credit ratings of countries at such times, Slovenia is therefore ranked among the most reliable countries for foreign investors by this upgrading of its rating. Slovenia’s rating was last upgraded by Moody’s in September 2017 to Baa1 and it was then attributed a stable outlook. The outlook became positive in April 2019.

According to the agency, two main factors contributed to the upgrade of the credit rating. One of these was the improvement of the public debt burden and debt affordability metrics relative to the nation’s peers, and the other important factor was the significant improvement of the health of the banking system, as well as the completion of the privatisation of the country’s largest banks.

Relating to the first factor, the agency notes a considerable decrease in financing and interest costs, as relatively expensive maturing debt was swapped with cheaper debt. Furthermore, Slovenia recorded the fastest reduction of government debt burden of all the EU Member States, except Ireland, before the onset of the COVID-19 crisis.

The agency also determined that the COVID-19 pandemic would impact the condition of public finances in EU Member States. Moody’s expects that the fiscal and economic foundations built by Slovenia before the COVID-19 crisis will remain resilient despite the impact of the crisis, so that public finance remains stable and banks remain liquid.

Regarding the second factor that affected the upgrade of the rating, the agency highlighted significant and lasting improvements to the functioning of Slovenia’s banking system, which was the subject of recapitalisation as well as the transfer of non-performing assets to the Bank Asset Management Company. The improvements are also reflected in a substantial decrease in non-performing loans in the banking system.

The stable outlook of the rating reflects the expectation that the current crisis related to COVID-19 will not leave a significant and lasting negative impact on the economy and that the country's economic and fiscal strength will remain aligned with the A3 rating. The stable outlook further forecasts that the banking system will resist the pandemic shock and ensure sufficient capacities to support the economic recovery next year.