Luxembourg maintains triple AAA
(CS) Fitch Ratings has kept its AAA rating of Luxembourg with a stable outlook unchanged, leaving the Grand Duchy one of only nine countries worldwide to hold the top rating by the three leading agencies.
Luxembourg has also been rated AAA with a stable outlook by Standard & Poor's and Moody's. This makes the country part of an exclusive club of only nine countries to hold a triple AAA. The others are Australia, Canada, Denmark, Germany, Norway, Singapore, Sweden and Switzerland.
In its review of Luxembourg, Fitch commented positively on public finances and the positive effects of the future package savings measures. At the same time it warned of the long-term financing of the pensions system.
As in previous reports, and in line with comments made by S&P and Moody's, Fitch also commented on the large share of the financial sector in the Luxembourg economy.
In light of recent developments, Fitch estimated that an exit of Greece from the eurozone would have only limited effects on Luxembourg.
The country's involvement in the Base Erosion Profit Shifting talks at OECD level – a measure aimed at combating tax avoidance – should also not have significant effects on the presence of companies in Luxembourg, the agency said.
Luxembourg has come under scrutiny for its practice of tax rulings, with a committee of the European Parliament looking into the issue EU-wide in the light of the LuxLeaks scandal, which unveiled the scope of tax avoidance practiced by multinationals through Luxembourg.
The Grand Duchy has, however, maintained that the tax rulings offered are legal, while at the same time now working at EU and OECD level to find a common approach to the matter among member states.
Finance Minister Pierre Gramegna welcomed Fitch's AAA, saying that the government's efforts to diversify the economy and the financial centre, and to consolidate public finances while keeping investments high had paid off.
“We put our public finances back on trail and continue to modernise our country, which allows us to tackle the challenges of the future with confidence,” the minister said in a statement published Saturday.