In a statement released last week, the rating agency Moody's announced an improved long-term issuer rating for Portugal, shortly after the country's Prime Minister, António Costa, resigned.
Moody's Investors Service raised the country's rating on long-term foreign- and local-currency issuer and senior unsecured ratings by two notches, from Baa2 to A3, putting Portugal ahead of Spain by any agency for the first time.
According to Moody's, the upgrade reflects "sustained positive credit effects over the medium term of a series of economic and fiscal reforms, private sector deleveraging and ongoing strengthening of the banking sector".
While the agency said it expects Portugal to have a lower GDP growth rate next year, from 2.1% to 1.6%, it noted that the country's medium-term growth prospects are solid. In its statement, it estimated an economic growth of around 2% annually over the next five years.
"Moody's estimates that Portugal's growth potential has increased materially over the past decade, through a range of economic and labour market reforms that have raised competitiveness and employment," said the agency.
Finance Minister of Portugal, Fernando Medina, said the rating improvement showed that "the fundamentals of the economy are robust and confirms that Portugal has achieved a place among the group of countries with the highest credit quality and greatest international credibility".
The upgrade comes in the wake of the Portuguese Prime Minister's resignation. Addressing the issue, Moody's noted that the country's institutions were dealing with the crisis in an "effective and transparent manner".
It warned, however, that a prolonged period of political uncertainty could negatively affect economic activity due to possible delays in private and public investments and could lead to wider deficits over the medium term than currently projected.