Moody’s maintains triple-A rating for Netherlands

When seven weeks of coalition talks on a raft of austerity measures ended in failure, Moody’s warned that the Netherlands might lose its enviable triple-A credit rating.

However, financial daily het Financieele Dagblad reports that the company is a lot milder in its Weekly Credit Outlook published on Monday. Moody's is positive about the budget agreement reached by the outgoing cabinet and opposition parties Green Left, D66 and Christian Union. Even though Moody’s expects the political situation in the Netherlands to remain volatile for the rest of the year, its misgivings did not translate into consequences for the country’s creditworthiness.

Its solid institutional character framework and fiscal discipline argued in the country’s favour. The Netherlands’ 65-percent ratio between debt and Gross Domestic Product may be higher than it used to be before the financial crisis, but is still well below the 87-percent euro zone average. Moody’s predicts the Dutch economy will shrink by 0.6 percent this year and grow by 1.2 percent in 2013.

Just like last week, the ratings agency warned that the credibility of the euro zone as a whole could be adversely affected if the Netherlands – one of the countries which has consistently argued for strict adherence to EU budgetary rules – failed to live up to its own standards.

On Wednesday last week, Moody’s competitor Fitch Ratings Inc maintained the triple-A credit rating for the Netherlands, but warned this might change if the country faileed to reduce its budget deficit to below the EU's limit of three percent of GDP by 2013.

(gsh/imm)