Evaluation of the Latvian Financial Security: Aspects of Government Debt Policy

Abstract

Due to increased risk and severity of the global economic and financial crisis, the evaluation of financial security is vital for the national security. Internationally recognized indicators, such as sovereign credit ratings, may overestimate the actual situation due to political reasons. This paper presents a consolidated indicator of the state financial security, which takes into account a number of the state economic and financial parameters. The calculated indicator correlates well with the sovereign ratings for low rating values, but gives more pessimistic estimation for high ratings.