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Fitch affirms El Salvador's ratings with a stable outlook

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Fitch affirms El Salvador's ratings with a stable outlook

Fitch Ratingson July 7 affirmed El Salvador's long-term foreign and local currency issuer defaultratings at B+, with a stable outlook.

Fitch also affirmedthe country's ceiling at BB and short-term foreign currency issuer default ratingat B.

The ratingsbalance El Salvador's macroeconomic stability underpinned by dollarization, itsadequately capitalized banking system and solid sovereign repayment record.

The ratingsare constrained, however, by the country's "rising debt burden and growth underperformancerelative to peers, political polarization, prolonged periods of congressional gridlock,and weak business confidence," Fitch noted.

While the country'sgrowth picked up to 2.5% in 2015 from 1.4% in 2014, it is not sufficient to generateemployment, reduce poverty or stabilize the general government debt dynamics, Fitchsaid.

"Fiscaladjustment would be needed to arrest the steady increase in the debt burden butpolitical tensions pose risks for progress on fiscal consolidation and growth-enhancingmeasures," the rating agency noted.