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      Standard & Poor's confirms Luxemboug's AAA rating with a "stable" outlook

      Standard & Poor's confirms Luxemboug's AAA rating with a "stable" outlook

      The ratings agency Standard and Poor´s has confirmed its rating on the Luxembourg economy at AAA for long-term debt and A-1+ for short-term debt.

      S&P´s issued Luxembourg with a “stable” outlook, highlighting the political stability of the country and the robustness of its public finances as strong assets which should enable Luxembourg to cope with potential external shocks.

      Pierre Gramegna, the Minister of Finance said “This positive outlook reflects our economic stability which is reinforced by our diversified economy. Luxembourg has solid macro economic fundamentals with the lowest public debt levels in the EU which gives us our competitive edge.”

      The agency expects the Luxembourg economy to grow by around 2.0% from 2013 to 2016. The Luxembourg government says this growth will largely be driven by financial services. The agency notes that the investment fund industry will be a strong sector for growth as demonstrated by the historical level of 2.500 billion euros reached at the end of 2012. This figure represents more than a quarter of the total assets under management in European funds.

      Despite the upcoming challenges faced by the banking sector, such as the introduction of automatic exchange of information from 2015 and the cost of compliance due to new regulations, the ratings agency believes that the banking system will remain profitable over the period 2014-2016. It also states that the size and diversification of the financial sector can offset a less sustained overall growth and an increasing regulatory pressure.

      Luxembourg, Germany and Finland are the only countries left with an "AAA" rating in the Eurozone.  According to S&P’s, the "AAA" rating is based on the good resilience of the Luxembourg economy and public finances to external shocks, in particular because of the high degree of economic prosperity and net assets held in the state's portfolio, including the existence of a large pension pool.