The ratings on the Kingdom of Denmark reflect policymakers' longstanding commitment to fiscal discipline, supporting the sovereign's substantial fiscal flexibility. The general government is expected to continue posting significant fiscal surpluses, equivalent to 1%-2% of GDP in the medium to long term (excluding flows to and from the second-pillar pension system). Having peaked at 81% of GDP in 1993, general government debt is expected to fall to an estimated 40% of GDP by year-end 2005 and is forecast to continue declining steadily in the medium term. The sustained decline in the public debt burden, coupled with a robust pension system and efforts to boost labor-market participation, is expected to provide sufficient fiscal flexibility to meet the challenge of an aging
