Moody's lowered the long-term issuer and senior unsecured rating of one of the smallest countries in South America, Suriname, to B2 from B1 and changed the outlook to negative on the back of rising debt ratios despite fiscal reforms adopted by the authorities.
The rating agency also downgraded the country's long-term foreign-currency bond and deposit ceilings to Ba3 from Ba2 and to B3 from B2, respectively. The long-term local-currency bond and deposit ceilings were maintained at Ba2.
Suriname's government debt burden stood at 70.9% of GDP in 2016, compared to 26% of GDP two years ago. Moody's expects the debt burden to stabilize around 60% of GDP. However, in the absence of additional measures to strengthen the fiscal position, the agency expects the pace of fiscal consolidation to be gradual, with budget deficits averaging about 6% of GDP between 2017 and 2019.
Suriname's long-term issuer and senior unsecured rating balance the deterioration in fiscal metrics against an improvement in external accounts and favorable investment prospects, mostly in the mining sector. However, institutional constraints may limit the government's ability to implement a comprehensive reform agenda, Moody's said.