El Salvador: Sovereign Debt Rating at Risk

The possibility that El Salvador maintains its sovereign debt rating, currently set at BB, depends on the ability of the government not to increase the level of public indebtedness.

So say analysts from the rating agency Fitch Ratings, who added that it is essential that the government maintains control of current growth in expenditure, and preferably tries to reduce it, so as not to further increase the ratio of government debt to gross domestic product (GDP).

However, as an article in Elsalvador.com points out, "the overall national budget for next year includes an increase in public debt equivalent to 3.1% of GDP or $743.6 million. Currently, the debt / GDP ratio is 52.3%. "

Source: elsalvador.com

More on this topic

Fitch Publishes Panama Sovereign Report

May 2010

On March 2010, Fitch Ratings raised Panama’s long-term foreign currency and local currency Issuer Default Ratings (IDRs) to 'BBB-' from 'BB+'.

The upgrades reflect a sustained improvement in public finances, underpinned by recent tax reforms, and the economy's resilience to the global financial crisis and associated recession.

Fitch Raises El Salvador’s Rating

August 2011

The risk rating agency has raised the rating outlook from "negative" to "stable" based on the efforts of fiscal consolidation and stabilization of national debt.

The outlook has been "negative" from 2010 due to increasing levels of indebtedness. The rating remained at "BB".

Fitch has affirmed Guatemala's IDRs at BB+

July 2009

Fitch Ratings has affirmed Guatemala's local and foreign currency Issuer Default Ratings (IDRs) at 'BB+'. The Rating Outlooks on both ratings are Stable.

Guatemala's track record of macroeconomic stability, low public and external debt burdens, as well as the government's solid commercial debt repayment history continue to support the sovereign's ratings.

Fitch Downgrades Mexico to 'BBB'

November 2009

Fitch downgraded Mexico's Issuer Default Rating (IDR) from 'BBB+' to 'BBB' in foreign currency and from 'A-' to 'BBB+' in domestic currency.

Both ratings have a 'Stable' outlook. Additionally, the country's ceiling was reduced to 'A-' from 'A'.

Fitch downgraded Mexico's ratings because the country's fiscal situation has gotten worse with the financial crisis and a reduction in Mexican oil production.