(Bloomberg) — S&P Global Ratings put a positive outlook on Ireland’s credit rating, underscoring just how robust the country’s finances are ahead of next month’s general election.
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The ratings firm expects Ireland to use proceeds from corporate tax receipts to rebuild fiscal buffers. S&P currently scores the country eight levels above junk, having lifted the rating one notch to AA in May last year.
“We now estimate the government will run a fiscal surplus equivalent to 7.4% of national income,” the ratings agency said in a statement Friday, citing in part a tax windfall from Apple following a recent EU ruling.
The change in outlook boosts the government coalition parties, which are hoping to clinch a fresh term after the Nov. 29 vote. The country boasts one of Europe’s only budget surpluses, putting the finance ministry in an enviable position as many of its European peers struggle with deficits. It used its disproportionate corporation tax intake to hold a giveaway budget in October aimed at wooing voters.
Meanwhile, it has also been able to establish a sovereign wealth fund with the proceeds, thanks to the outsized number of multinationals like Apple Inc. and Pfizer Inc. based there. Its a far cry from 14 years ago, when the country was bailed out by the European Union.
Moody’s previously put a positive outlook on Ireland’s credit rating in August, highlighting those same fiscal strengths, while Scope Ratings upgraded the country’s credit rating by one notch in the same month, putting it eight levels above junk. Fitch upgraded by one notch to AA in May, citing the budget surplus, while Ireland is three levels below the top grade at DBRS.
A new Fitch report also published Friday, highlighted the country’s strong credit fundamentals and resilient domestic economy, while leaving the rating unchanged at AA with a stable outlook.
This story was produced with the assistance of Bloomberg Automation.
(Updates with Fitch report in final paragraph)
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