Moody's Investors Service confirmed Estonia's foreign and local currency ratings at A1. The long-term foreign currency bank deposit ceiling was also confirmed at A1. The outlook for these ratings was negative.

The firm said the Estonian government credit worthiness is likely to remain resilient in the face of a deep and potentially prolonged recession. Due to disciplined fiscal policy during the boom period, and an impressive fiscal adjustment in reaction to the current circumstances, Moody's said the country's budget deficit was likely to remain below 3% of GDP as per the Maastricht threshold. This performance, which is the best in the EU, should permit the country to officially adopt the euro in January 2011.

Meanwhile, the negative outlook for the Estonian government's ratings reflects the high degree of uncertainty for the Estonian and regional economic outlook, Moody's said.

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