“The maintenance of the AAA rating with a stable outlook underlines the solidity of our public finances and confirms the validity of the measures taken during the last tripartite,” said finance minister Yuriko Backes (DP). Photo: Romain Gamba/Maison Moderne/Archives

“The maintenance of the AAA rating with a stable outlook underlines the solidity of our public finances and confirms the validity of the measures taken during the last tripartite,” said finance minister Yuriko Backes (DP). Photo: Romain Gamba/Maison Moderne/Archives

Luxembourg retains its AAA credit rating from Moody’s, with a stable outlook. This seems to confirm the effectiveness of the measures taken in the context of the crisis.

The rating agency Moody’s has confirmed Luxembourg’s AAA credit rating with a stable outlook. This higher rating reflects the country’s economic resilience, the soundness of public finances and the transparency and efficiency of government bodies.

Despite the deterioration of the global economic situation linked to current inflationary pressures, Moody’s stresses that the economic fabric remains robust. The rating agency expects GDP growth of 1% in 2023 and 2% in 2024.

According to Moody’s, the measures taken by the government within the framework of the tripartite meetings and the good performance of the labour market will mitigate the negative effects of the inflationary environment on companies and households and protect jobs in 2023.

Reduced risk of financial and economic shocks

With regard to the financial sector, which remains one of the fundamental drivers of growth, Moody’s highlights the diversification of the sector into investment funds, asset management and insurance. The agency also highlights efforts to diversify the economy into high value-added industries such as information and communications technology (ICT), health and environmental technologies. According to Moody’s, strong financial services regulation and transparent and efficient institutions significantly reduce the probability and magnitude of potential financial and economic shocks.

Fiscal risks remain

Moody’s also highlights the strength of public finances despite the fiscal impact of the support measures. According to Moody’s estimates, the level of public debt will increase from 26.3% in 2023 to 28.6% of GDP in 2024. At the same time, Moody’s points out that fiscal risks continue to exist, such as long-term economic and budgetary pressures related to population ageing.

Finance minister (DP) commented: “Maintaining the AAA rating with a stable outlook underlines the strength of our public finances and confirms the soundness of the measures taken at the last tripartite. These support the purchasing power of households and mitigate the negative impact of the energy and inflationary crisis on businesses, without jeopardising our commitment to keep public debt below 30% of GDP at all times.”

This story was first published in French on . It has been translated and edited for Delano.

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