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S&P affirms Fiji's ratings

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S&P affirms Fiji's ratings

Standard & Poor's Ratings Services affirmed Fiji's long-termforeign and local currency sovereign ratings at B+ and its short-term rating atB.

The outlook remains stable.

The rating agency said April 27 that the ratings affirmationreflects its view of the country's weak institutional settings, limited monetarypolicy flexibility, income levels and weakening fiscal metrics. However, the government'sfalling interest costs and its sound external position mitigate these weaknesses.

S&P expects Fiji's economy to slow temporarily in 2016 dueto the impact of Cyclone Winston. Fiji's external metrics are likely to remain supportiveof the sovereign ratings. The current account deficit may widen in 2016 and 2017,reflecting higher imports.

The rating agency may lower the ratings within the next 12 monthsif the impact of Cyclone Winston is worse than forecast. A downgrade could alsooccur if the political and policy environment becomes unpredictable.

On the other hand, the ratings may be raised if Fiji's economicgrowth outperforms forecasts. S&P would also need to see the government cutits foreign exchange restrictions and maintain a healthy level of reserves.

S&P Ratings and S&PGlobal Market Intelligence are owned by S&P Global Inc.