International credit rating agency Standard & Poor’s has reaffirmed its view of Guernsey’s financial and economic stability after giving Guernsey the highest rating possible against its newly revised technical scoring methodology.
The changes in the methodology mean that Guernsey’s sovereign credit rating has been revised to AA+, which is now the highest rating a jurisdiction without its own currency is likely to achieve.
In its November 2011 report Standard & Poor’s says that the high grade credit ratings for Guernsey “continue to be supported by Guernsey’s success in attracting foreign financial institutions, its prosperity, and its very strong government balance sheet”.
The report illustrates that Guernsey’s strong and stable economic and fiscal position has not changed despite the continuing global economic downturn. This reinforces last week’s Financial Stability Board report that put Guernsey in the top tier of jurisdictions that contribute to global financial stability.
Guernsey’s short, medium and long-term fiscal position remains extremely strong, sustainable and sound, with zero external borrowing, total reserves of 109% of GDP, including a pay-as-you-go public pension scheme with a buffer reserve of £600m, and an employee superannuation pension scheme that is well funded under international FRS17 rules. All of these outstanding factors are reflected in Guernsey’s high credit rating and robust economic performance.
Charles Parkinson (pictured), Guernsey’s Treasury & Resources Minister, says: “The latest reports on a number of jurisdictions come as a result of Standard & Poor’s changing aspects of their technical scoring methodology for assessing risk. For smaller jurisdictions, the new technical scoring methodology does not work in our favour, and yet we have been given a high grade score of AA+, the highest rating that is achievable for us against the new methodology.
“While this is one useful and supportive measure of our stability, it is important to point out that it remains academic as we have not issued any debt. The revised methodology and revised rating will not have an impact on our economic competitiveness or ability to attract business to Guernsey, and so in very simple terms it changes nothing. However it does highlight our commitment to transparency and to independent external assessment.”