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Fitch lifts Lithuania outlook to positive

Fitch Ratings revised Lithuania's rating outlook to positive from stable and affirmed the long-term foreign-currency issuer default rating at A-.

The rating agency said the outlook revision reflects its increased confidence that Lithuania's policy framework will continue to reduce macroeconomic volatility and mitigate the economy's vulnerability to external shocks. That framework is characterized by prudent fiscal policy and eurozone membership.

The country ran a general government surplus for two straight years to 2017, driven by the cyclical position boosting revenues and by spending restraint, according to Fitch.

Lithuania's general government debt-to-GDP ratio declined to 39.7% at the end of 2017, and the debt watcher expects primary surpluses in excess of 1% of GDP to pull down debt to 35.3% of GDP by the end of 2020.

Fitch also forecasts the country's net external debt to fall to 12.5% of GDP at the end of 2020 from 19.5% of GDP at the end of 2017. Inflation is expected to average 2.8% in 2018 compared to 3.7% in 2017.