NEW YORK, Jan 12 (Reuters) - Moody's Investors Service upgraded Uruguay's credit ratings on Monday to reflect steady improvement in the country's debt profile despite an adverse economic and financial environment.

The ratings agency raised Uruguay's foreign- and local-currency bond ratings by one notch to "Ba3," in line with the notes already assigned to the country by competing firms Standard & Poor's and Fitch.

Moody's decision was based on a "somewhat lower" degree of dollarization in government debt and, at margin, in the banking system, senior credit officer Mauro Leos said in a statement.

A conservative fiscal stance and proactive debt management has resulted in lower ratios of debt to revenues and interest-rate payment to revenues, he Moody's noted.

"Though still somewhat high, government-debt ratios have been trending downwards in a very significant way," Leos wrote in the statement.

"Given the improved maturity profile, Uruguay faces moderate rollover risks during 2009-2010, which should mitigate potential credit risks derived from a global financial environment in which liquidity is expected to remain tight," he added.

The ratings are also supported by Uruguay's solid track record of economy policy continuity and willingness to honor debt, but are constrained by the small size of its economy, which limits its ability to confront external shocks, Moody's said.

The outlook on the new ratings is stable and already incorporates a deceleration in economic activity which is expected to follow an extended period of above-trend growth, Leos said.

To obtain more rating upgrades, the analyst said, Uruguay will need to preserve a fiscal policy that assures sustained medium-term reductions in governemnt debt ratios. (Reporting by Walter Brandimarte; Editing by Kenneth Barry)