Faroes retain their credit rating

American credit rating firm Moody’s today announced that the Faroes retain their current Aa2 rating.

Defined as having “a very strong capacity to meet its financial commitments”, Aa2 is the third-highest rating on the 21-tier scale of the country risk rating scale.

The announcement came after a series of online meetings with the Faroese government, the opposition and the Faroese central bank.

A good credit rating improves the interest rates that the Central Bank pays on loans from foreign investors.

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Moody’s concludes that:

- the Faroe Islands have a healthy degree of financial independence

- the Faroe Islands have a low level of refinancing risk, with a minimum liquidity of DKK 3.3 billion this year

- despite a state budget deficit in 2020 and 2021 caused primarily by the Covid pandemic, the debt-to-income ratio will most likely return to healthy levels in the coming years

- Denmark will most likely step in should the economic situation in the Faroes worsen.

Read the Faroese version of this article here.

Translated by prosa.fo.

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