S&P Global Ratings on July 18 revised its outlook on Hondurasto positive from stable.
It also affirmed the country's long- and short-term sovereigncredit ratings at B+ and B, respectively, and its transfer and convertibility assessmentat BB-.
S&P said that its outlook revision reflects sustained fiscalimprovement and favorable economic growth that could improve Honduras' fiscal flexibilityover the next two years.
The ratings affirmation, meanwhile, was based on the country'sweak political institutions, low-income economy and exchange rate rigidities thatconstrain monetary policy, the rating agency noted. Honduras' politicalinstitutions remain "weak" and volatile, as does the system of checksand balances among government branches, S&P said.
S&P believes that revenue collection measures and spendingcontrol, together with restructuring in the energy sector, will allow the governmentto maintain the country's fiscal deficit at around 3.5% of GDP for the next twoyears. The country's economy is forecast to grow 3.6% in 2016 and climb as highas 3.7% over the next two years.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.