On Friday 12 May 2023, global credit rating agency DBRS Morningstar confirmed Luxembourg's "AAA" rating, with a "stable" outlook.
According to DBRS Morningstar, the rating reflects Luxembourg's "very strong public finances", with a downgrade viewed as "unlikely".
As reported by Luxembourg's Ministry of Finance, the agency concluded that the credit fundamentals of the Grand Duchy remained solid, despite the deterioration in the global economic situation linked to inflationary pressures.
DBRS Morningstar noted that real GDP had grown by 1.5% in 2022, with continued growth expected. Nevertheless, it warned that "diverging trends monetary and fiscal policies [...] are likely to exert opposing impacts of growth dynamics".
The agency also noted that the budgetary situation has deteriorated less than expected, despite the impact of the support packages on public finances in 2023 and 2024.
DBRS Morningstar also highlighted Luxembourg's low level of public debt, which remains among the lowest in Europe and below the Luxembourg Government's self-imposed ceiling of 30% of GDP.
Moreover, the agency emphasised the importance of Luxembourg's "stable political environment" and "a high institutional quality", as well as the attractiveness of its financial centre.
Luxembourg's Minister of Finance, Yuriko Backes, commented: "I am delighted with the confirmation of the 'AAA' rating, the first since the publication of the new budgetary forecasts of the stability and growth programme 2023. This excellent rating illustrates the relevance of the set of measures introduced to support household purchasing power and business competitiveness in this period of high inflation. It also reminds us of the importance of a responsible and far-sighted policy to maintain solid finances and face future challenges."
