How Countries Earn AAA Rating (Part 5 of 5)

How countries earn AAA ratings

The Netherlands, home to the world’s oldest modern stock exchange, Euronext Amsterdam, stands out as one of the select few countries boasting a triple AAA rating from two prominent agencies. This prestigious rating is attributed to several factors, including a high-value, flexible, and open economy, robust external positioning, and effective institutions, as evidenced by World Bank governance indicators.

Key components supporting the Netherlands’ AAA rating include a reduced public debt of 50% of GDP in 2022, aligning closely with the AAA median of 39% of GDP. Fiscal prudence and sound policies have contributed to this decline. The country’s credit strength is further enhanced by a sturdy banking sector, external surpluses, and a balanced budget in 2022. The Netherlands’ fiscal policy stands out in the EU, with consistent low deficits and three years of surpluses pre-2020.

Another rating agency underscores the Netherlands’ AAA/Stable ratings, citing a wealthy, diversified, and globally competitive economy, coupled with favourable financing conditions and a resilient banking system. The country benefits from a robust external position, prudent fiscal policies, and its memberships in the European Union and the Euro zone. While the significant fiscal response to recent crises has increased government debt, a post-crisis policy framework is anticipated to remain comparatively expansionary in the coming years.

Countries earning AAA ratings prioritise strengthening their budgetary systems, fostering economic growth, maintaining a robust external position, ensuring a resilient banking sector, and implementing sound fiscal policies. Additionally, a strong focus on Environmental, Social, and Governance (ESG) factors, including the rule of law, stable economic and political institutions, as well as low corruption levels, contributes to their sustained AAA status.

Please note that the rating opinion presented in this write-up was only adapted and not that of DataPro.


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