S&P ups Czech Republic rating one notch to 'A'

...state's good growth prospects and public finance reforms.

The outlook was kept stable.

"The upgrade reflects the implementation of public finance reform, which will help bring down the Czech Republic's comparatively high government deficits," S&P credit analyst Kai Stukenbrock said in a statement.

"The ratings are furthermore supported by good economic growth prospects, a well diversified and wealthy economy, and an above-par external position," he added.

But he said the country needed to cut government deficits and implement more fiscal and social security reforms. The general government deficit is expected to reach 3.9 percent of gross domestic product in 2007 due to an expansionary pre-election budget.

S&P predicted this deficit to fall to 2.5 percent by 2010 while GDP growth is seen averaging around 5 percent between 2007-2010. But it does not expect euro zone accession before 2012.

Rival agencies Moody's and Fitch rate the Czech Republic 'A1' and 'A' respectively.

[LONDON/Reuters/Finance.cz]