Estonia's sovereign ratings are supported by a strong sovereign balance sheet, a sound macroeconomic policy framework, eurozone membership, and healthy governance indicators in comparison with rated peers, the Estonian Ministry of Finance said.

Fitch projects economic growth to accelerate to 2.3 percent and 2.8 percent in 2017 and 2018, respectively, due to higher growth in key trade partners, sustained private consumption and stronger public investment driven in part by higher execution of EU structural funds.

Estonia's general government debt fell to 9.5 percent of the GDP at end of 2016, which according to Fitch is less than one fifth of the peer median. The government's net financial asset position is solid at 43.5 percent of the GDP; this includes liquid assets equal to 5.2 percent of  the GDP.  

The rating agency evaluated Estonian banks' asset quality and capitalization to be sound.

Fitch estimated sustained strong economic growth without excessive imbalances and narrowing the gap in incomes per head between Estonia and the AA median to trigger positive rating action. Risk factors which could trigger negative rating action include economic or financial shocks that adversely affect Estonia's macroeconomic and financial stability.