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Americas Sovereign Rating Trends 2020

(Editor's Note: S&P Global Ratings publishes a regional sovereign ratings outlook twice a year, including rating and outlook trends as well as sovereign-specific summaries. See also our global overview "Global Sovereign Rating Trends 2020," published Jan. 29, 2020. You will find the current set of sovereign trend publications and videos on spratings.com/sovereignoutlook.)

Rating Outlook And Trends

The credit quality of sovereigns in the Americas, excluding Canada and the U.S., has deteriorated slightly over the last six years to just below 'BB+'. However, the GDP-weighted sovereign rating for the Americas has remained stable, close to 'AA-' during that period, largely because of stable ratings in Canada and the U.S. Excluding these two countries, sovereign credit quality has declined since its historical peak three and a half years ago--both the unweighted and GDP-weighted averages for the Latin American and Caribbean region have dropped to close to 'BB' (see chart 1).

S&P Global Ratings rates 14 of the 31 sovereigns in the Americas in the investment-grade category ('BBB-' and above), the same as at the end of June 2019 (see chart 2). This group contains the largest share of the region's GDP. (All ratings refer to long-term foreign currency ratings.)

The region's highest-rated sovereign is Canada, which we rate 'AAA', while in the Latin America and Caribbean region, Chile and Bermuda are the highest rated, both at 'A+'. The lowest are Argentina and Venezuela, which we rate 'CCC-' and 'SD' (selective default), respectively. Argentina defaulted in August 2019 and December 2019 and is likely to undertake a new debt restructuring in 2020, while the rating on Venezuela is still 'SD' after defaults in 2017 and 2018.

The rating category with the largest number of sovereigns is 'BBB', with 10, followed by 'B' with eight sovereigns.

Chart 1

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Chart 2

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Since June 2019, we lowered our long-term foreign currency ratings on Argentina to 'CCC-' from 'B' and on Trinidad and Tobago to 'BBB' from 'BBB+'. We upgraded Barbados to 'B-' from 'SD', as a result of Barbados' successful foreign currency debt exchange, and Jamaica to 'B+' from 'B'.

In addition to these rating actions, we also revised the outlooks on Argentina and Bolivia to negative, the outlook on Brazil to positive, and the outlooks on Nicaragua and Aruba to stable from negative. We also raised our rating on Jamaica, with a stable outlook (from positive previously), and we lowered our rating on Trinidad and Tobago, with a stable outlook (from negative previously). Finally, we view the outlook on Venezuela as not meaningful, since the country is currently in selective default.

We have stable outlooks on most of the long-term ratings on sovereigns in the Americas. We currently have positive outlooks on two sovereigns (Brazil and Bermuda) and negative outlooks on four (Argentina, Bolivia, Costa Rica, and Mexico) (see chart 3). Investment-grade sovereigns that have stable outlooks include Aruba, Canada, Chile, Colombia, Curacao, Montserrat, Panama, Peru, Trinidad and Tobago, Turks and Caicos, the U.S., and Uruguay. In June 2019, we had negative outlooks on five sovereigns, and we had two countries, Jamaica and Bermuda, with positive outlooks.

Chart 3

image

Table 1

Americas Sovereign Rating Strengths And Weaknesses
Issuer Sovereign foreign currency ratings Institutional assessment Economic assessment External assessment Fiscal assessment, budget performance Fiscal assessment, debt Monetary assessment

Argentina

CCC-/Negative/C 6* 5 6 6 5 5

Aruba

BBB+/Stable/A-2 2 3 1 3* 4

Bahamas

BB+/Stable/B 2 4 6 3 4 4

Barbados

B-/Stable/B 5 5 6 3 5 6

Belize

B-/Stable/B 6 6 6 5 6 5

Bermuda

A+/Positive/A-1 2 2 3 1 3* 5

Bolivia

BB-/Negative/B 5 5 3 6* 2* 4

Brazil

BB-/Positive/B 4 5 3 3

Canada

AAA/Stable/A-1+ 1 1 2 1 3 1

Chile

A+/Stable/A-1 2 4 4 2 1 2

Colombia

BBB-/Stable/A-3 3 4 5 3 4 3

Costa Rica

B+/Negative/B 4 4 5 6 5 5

Curacao

BBB+/Stable/A-2 2 4 2 3 1 6

Dominican Republic

BB-/Stable/B 5 3 5 5 5 4

Ecuador

B-/Stable/B 6 5 6 3 4 6

El Salvador

B-/Stable/B 6 5 5 5 5 6

Guatemala

BB-/Stable/B 4 6 3* 4 4 4

Honduras

BB-/Stable/B 5 5 2 5 4 4

Jamaica

B+/Stable/B 4 6 2 6 4

Mexico

BBB+/Negative/A-2 3 4 2 4* 3

Montserrat

BBB-/Stable/A-3 2 5 3* 1 5

Nicaragua

B-/Stable/B 5 6* 6 3 6

Panama

BBB+/Stable/A-2 3 2 5 2 2 5

Paraguay

BB/Stable/B 5 5 1 3 1 5

Peru

BBB+/Stable/A-2 3 4 3 2 2 3

Suriname

B/Stable/B 5 6 2 5 6 5

Trinidad and Tobago

BBB/Stable/A-2 3 4 3 2 3 4

Turks and Caicos

BBB+/Stable/A-2 2 4 4 1 1 6

U.S.

AA+/Stable/A-1+ 2 1 3 4 5 1

Uruguay

BBB/Stable/A-2 3 3 2 5 4 5

Venezuela

SD/NM/SD 6 6 6 6 6 6
*Deterioration since June 2019. §Improvement since June 2019.

Coping With Another Year Of Low Growth

The ability of governments to manage the economic and political consequences of persistently low growth will remain central to our sovereign analysis for Latin America. We expect that 2020 will be the seventh consecutive year of less than 2% growth in Latin America, largely because of domestic economic and political weaknesses. The low average growth incorporates:

  • Continued recession in Venezuela and Argentina,
  • Poor growth in Mexico,
  • Slightly better growth in the Andean region and Central America, and
  • Moderate acceleration in Brazil.

The sluggish economic performance reflects many entrenched factors, including political instability, weak institutions, high dependence on commodities, and shortcomings in fiscal and monetary policy.

In 2020, we expect continuity in key economic policies in Canada, with GDP growing by 1.6%. The advent of a minority government after elections last year is not likely to change Canada's economic policies or its rating trajectory.

We expect that the U.S. economy will grow 1.9% in 2020 as the country experiences its longest economic recovery in history (starting in 2009), with low unemployment and inflation and falling poverty. However, its impressive macroeconomic performance contains a notable weakness: The general government fiscal deficit is likely to exceed 4.5% of GDP in 2020, a comparatively high level for an economy at this stage of its business cycle. We expect no significant change in U.S. economic policy in 2020, an election year.

Failure to reverse a recent decline in GDP growth, and avoid potential weakening of public finances, could erode Mexico's creditworthiness. Growth is likely to recover to 1% in 2020, from nearly zero in 2019. Mexico's modest growth rate (similar to the pace in much wealthier Canada and the U.S.) for the past two decades has prevented it from narrowing the large gap in income with those two countries, despite tight economic integration (see chart 4). The formal ratification of a new free trade agreement between Mexico, the U.S., and Canada (USMCA) removes an important source of uncertainty for the Mexican economy. However, the safeguarding of the cross-border links between the three countries is insufficient to substantially bolster investment, absent more positive policy signals from the government.

Chart 4

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We could raise our rating on Brazil if economic policies improve GDP dynamics beyond our expectations, or if rapid progress with the government's plans results in a faster reduction of fiscal deficits and a stabilization of debt dynamics. The administration of President Jair Bolsonaro has unveiled an ambitious list of economic and institutional reforms, perhaps the most ambitious of any emerging market country. They include improving and simplifying the tax system, reducing rigid budgetary rules, strengthening the autonomy of the central bank, privatizing state-owned enterprises, and reforming the country's federal system. Passage of such reforms depends largely on Congressional leadership, which played a strong role in passing a landmark pension reform last year.

Argentina's rating trajectory depends on the government's strategy to stabilize the economy, lower inflation, strengthen public finances, renegotiate its debt, and create foundations for GDP growth. The sovereign defaulted in December 2019 when the administration of newly elected President Alberto Fernandez announced a unilateral extension of U.S. dollar-denominated short-term debt, following an extension by the previous administration in August 2019. The government is likely to renegotiate its debt with external creditors, both private and public, in 2020.

Venezuela remains in default and its political trajectory is still uncertain, with scheduled elections to its national assembly in 2020. Over 4 million Venezuelans are estimated to have fled the country in recent years as the economy continues to contract. Oil production is likely to remain low, having fallen to likely less than 700,000 barrels per day in 2019 from 3.1 million barrels per day in 1998.

The Andean region is likely to enjoy moderate GDP growth, better than its neighbors. However, economic performance will suffer in Chile following massive social protests in recent months. Unlike protests in countries such as Ecuador, Colombia, and Bolivia, the Chilean protests were not against new fiscal austerity, poor economic growth, or disputed elections. They likely reflect perceptions that Chile's substantial economic gains over the past decades have been unfairly distributed and that income inequality remains too high, despite an impressive reduction in poverty. The government has announced various fiscal measures in response to the protests and plans to hold a referendum in April 2020 on writing a new constitution.

Our analysis will focus on the long-term impact of recent developments on GDP growth and public finances. We will also focus on the ability of Chile's political leadership to contain public demands within institutional channels to maintain stability and predictability in economic policies, while the country likely changes its constitution.

In Colombia, we expect that a modest acceleration in GDP growth should help stabilize the net general government debt burden, despite recent struggles regarding the 2018 financing law (which was rejected on procedural grounds by the courts and then re-approved in late 2019). The fate of the financing law, along with recent social protests, highlights Colombia's challenging political dynamics. The diminished political capital of President Ivan Duque could limit the ability of the government to respond in a timely and forceful manner to potential adverse shocks, including security-related threats from Venezuela, or an unexpected deceleration in the economy.

Our analysis of Peru will focus on political uncertainty following the decision by President Martin Vizcarra to dismiss Congress and call for early Congressional elections in January 2020 (for an interim Congress until national elections in 2021). We assume broad continuity in economic policy, despite these developments, given Peru's track record of policy stability across administrations. However, prolonged political uncertainty, including difficulties in passing legislation, could dampen investment. Lower growth prospects could damage public finances, potentially worsening the ratings.

However, the recent developments could also encourage new leadership, in a country with a largely discredited political class, and facilitate reforming key public institutions and reducing corruption, with a potentially positive long-term impact on creditworthiness.

Building, or rebuilding, trust in the political system is a common challenge throughout the Andean region, as well as much of Latin America as a whole.

The somber economic panorama in much of Latin America risks overshadowing the region's diversity, including the impressive long-term GDP growth rates of several countries. Since 2000, the world economy has nearly doubled in size, according to International Monetary Fund data.

The five fastest-growing Latin American countries (Panama, Dominican Republic, Peru, Bolivia, and Honduras) all expanded faster than the world average (see chart 5). These countries have different economic structures (some are net commodity exporters and some net importers) and have pursued different growth strategies (some relying heavily on public-sector investment and some relying mostly on private-sector investment). The ability of such a diverse set of countries to sustain long-term GDP growth indicates that the region is not destined for poor economic performance.

Similarly, there are notable differences among the five regional sovereigns with the poorest long-term growth rates (Venezuela, Aruba, Barbados, The Bahamas, and Jamaica) (see chart 6). The worst performer, Venezuela, is a large economy with immense oil and natural gas reserves. In contrast, the other four are small islands heavily dependent on commodity imports and tourism. The diverging growth trajectories demonstrate the importance of policies and leadership in influencing long-term economic growth.

Chart 5

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Chart 6

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Table 2

Americas Economic Outlook
--Real GDP growth (%)-- --GG balance/GDP (%)-- --Net GG debt/GDP (%)-- --Current account balance/GDP (%)-- --Narrow net ext. debt/CAR (%)--
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
Argentina (3.0) (1.0) (4.7) (4.8) 87.2 79.8 (0.1) 0.4 182.6 183.3
Aruba (0.3) 0.9 (0.1) (0.2) 35.5 34.6 (0.3) (0.2) (5.5) (7.1)
Bahamas 0.9 (0.7) (5.4) (4.3) 49.1 53.8 (10.5) (16.3) 33.4 51.7
Barbados (0.1) 0.6 1.5 1.6 111.2 108.0 (3.9) (3.6) 64.4 56.1
Belize 2.5 1.8 (2.2) (2.8) 84.5 84.9 (7.5) (7.2) 76.4 77.0
Bermuda 1.1 0.8 0.2 0.4 1.9 0.5 12.3 12.0 (55.8) (58.7)
Bolivia (Plurinational State of) 2.5 1.4 (6.1) (5.2) 29.3 33.4 (5.5) (5.1) 16.3 25.0
Brazil 1.0 2.0 (5.9) (5.7) 61.0 64.5 (2.9) (2.9) 1.6 7.4
Canada 1.5 1.6 (0.9) (0.3) 37.3 36.2 (2.0) (1.8) 113.3 114.8
Chile 2.0 2.4 (3.9) (4.6) 15.5 18.4 (3.4) (3.3) 45.0 48.7
Colombia 3.2 3.2 (1.8) (1.6) 40.1 39.4 (4.0) (3.9) 108.2 104.9
Costa Rica 1.7 2.4 (5.7) (6.2) 55.8 59.7 (3.4) (3.3) 63.0 64.4
Curacao (1.5) (0.5) (3.0) (3.0) (24.2) (21.1) (26.2) (24.2) (47.8) (39.9)
Dominican Republic 5.0 5.0 (3.8) (4.1) 46.2 47.3 (1.8) (2.2) 78.0 78.8
Ecuador (0.5) 0.2 (1.7) (1.7) 47.0 46.4 0.0 0.8 114.7 118.4
El Salvador 2.3 2.5 (3.1) (3.1) 66.9 66.9 (4.5) (4.6) 78.0 76.1
Guatemala 3.3 3.5 (2.6) (2.9) 16.2 18.0 0.5 (0.5) 18.9 19.7
Honduras 3.3 3.4 (0.2) (1.7) 33.7 34.1 (4.9) (5.0) 24.1 27.4
Jamaica 1.5 1.9 0.4 0.7 80.5 77.0 (1.8) (2.0) 67.2 58.6
Mexico 0.1 1.0 (1.9) (2.2) 42.0 43.5 (0.4) (0.9) 33.5 31.2
Montserrat 0.9 1.5 0.0 0.0 (13.9) (11.7) (7.3) (22.6) (181.8) (186.6)
Nicaragua (5.0) (1.0) (1.8) (2.1) 41.7 43.6 3.6 3.7 114.5 111.0
Panama 3.5 4.0 (3.2) (2.6) 28.8 30.2 (7.5) (7.7) 70.6 70.2
Paraguay 0.0 3.3 (2.8) (1.8) 14.2 15.9 (0.8) (0.1) (1.2) (2.1)
Peru 2.4 2.8 (2.0) (1.9) 13.6 14.8 (1.4) (1.7) 19.3 19.1
Suriname 2.3 2.5 (6.3) (5.8) 64.1 64.8 (1.0) (0.9) 56.1 54.0
Trinidad and Tobago 0.4 2.0 (2.4) (4.4) 27.5 29.4 5.2 4.4 (47.1) (45.1)
Turks and Caicos Islands 3.2 2.5 5.1 6.0 (40.8) (41.8) (2.9) (3.9) (30.5) (28.6)
U.S. 2.3 1.9 (4.9) (4.7) 82.7 84.1 (1.4) (1.1) 315.3 312.2
Uruguay 0.5 1.5 (2.5) (2.6) 62.3 62.5 (0.7) (1.0) 31.6 25.0
Venezuela (20.0) (5.0) (29.8) (30.1) 16,047.8 16,890.7 274.6 225.6 438.4 556.3

Sovereign Summaries

Argentina (CCC-/Negative/C)

  • Analyst: lisa.schineller@spglobal.com
  • Latest publication: Argentina Long-Term Ratings Raised To 'CCC-' From 'CC'; Outlook Negative, Jan. 7, 2020
Rating score snapshot
  • Institutional assessment: 6
  • Economic assessment: 5
  • External assessment: 6
  • Fiscal assessment, budget performance: 6
  • Fiscal assessment, debt: 5
  • Monetary assessment: 5
Outlook: Negative

The negative outlook reflects the prominent downside risks to timely and full payment of debt per our criteria over the short term amid stressed economic and financial market dynamics. The sovereign's access to liquidity is likely to remain constrained as the Fernandez Administration outlines its economic policies while engaging in dialogue with bondholders, bankers, and the International Monetary Fund.

We could lower the ratings once the government finalizes terms with bondholders for a potential debt restructuring, which we expect is likely to be characterized as a distressed debt exchange based on our methodology. It could entail an extension of maturities, which will not be compensated by the issuer, or a reduction in the face value of debt. Additionally, we could lower the ratings if economic and financial stresses further threaten timely debt service or the sovereign misses a debt payment.

We could raise the ratings following implementation of a debt restructuring and as policy signals and execution start to successfully turn around or stabilize private-sector confidence, market turbulence subsides, and the government regains access to market financing.

(Originally published on Jan. 7, 2020)

Table 3

Argentina
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 13.3 15.0 12.8 14.5 11.7 10.0 9.5 10.6 12.3
GDP growth (2.5) 2.7 (2.1) 2.7 (2.5) (3.0) (1.0) 1.5 2.0
GDP per capita growth (3.6) 1.6 (3.1) 1.0 (3.4) (3.9) (1.9) 0.6 1.1
Current account balance/GDP (1.6) (2.7) (2.7) (4.9) (5.2) (0.1) 0.4 (1.7) (2.7)
Gross external financing needs/CAR&FXR 117.3 133.8 136.1 149.9 133.3 107.9 127.7 131.6 136.7
Narrow net external debt/CAR 116.7 154.6 153.6 192.2 180.3 182.6 183.3 166.7 157.8
GG balance/GDP (4.2) (4.6) (6.9) (6.3) (5.7) (4.7) (4.8) (4.4) (4.2)
GG net debt/GDP 31.2 42.6 45.5 49.4 75.5 87.2 79.8 69.0 62.5
CPI inflation 42.1 26.4 39.1 24.6 34.3 54.0 50.0 30.0 22.0
Bank credit to resident private sector/GDP 12.9 13.6 12.9 15.1 14.7 11.0 11.0 11.4 11.9
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Aruba (BBB+/Stable/A-2)

  • Analyst: manuel.orozco@spglobal.com
  • Latest publication: Aruba Outlook Revised To Stable From Negative On Growing Prosperity; 'BBB+/A-2' Ratings Affirmed, Aug. 6, 2019
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 4
  • External assessment: 3
  • Fiscal assessment, budget performance: 1
  • Fiscal assessment, debt: 3
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects our view that Aruba will continue making progress on its fiscal correction program over the next two years and stabilize the trajectory of government debt. We expect net general government debt, which includes liquid assets held by the public-sector pension fund, to average 34% of GDP in 2018, down from 36% in 2017-2018. In our view, Aruba's gradually strengthening prosperity boosts the resiliency of the economy. That should support further fiscal consolidation, which is in an incipient stage, despite structural rigidities in government spending and GDP growth prospects that are still below those of peers.

We could lower the ratings over the next two years if we see unexpected slippage in fiscal policy that results in a deteriorating net general government debt burden and a potential erosion of Aruba's net external profile. Poor fiscal performance could lead to a rising government interest burden, as measured against revenues. Similarly, negative external shocks could erode Aruba's net external position and potentially worsen its access to external financing. We could also lower the ratings if we see changes in Aruba's ties with the Netherlands that could, in our view, reduce institutional, policy, judicial, and political stability and predictability.

During the next 24 months, we could upgrade Aruba if we see policy execution that stabilizes the fiscal and debt trajectory, as well as higher and sustained economic growth.

(Originally published on Aug. 6, 2019)

Table 4

Aruba
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 25.7 26.7 26.8 27.7 28.9 29.4 30.0 30.5 31.1
GDP growth 0.3 5.7 2.1 2.0 0.9 (0.3) 0.9 0.9 1.0
GDP per capita growth (1.1) 4.4 0.8 2.2 0.5 (1.5) (0.3) (0.3) (0.2)
Current account balance/GDP (5.1) 2.6 2.7 0.2 (0.3) (0.3) (0.2) (0.1) (0.2)
Gross external financing needs/CAR&FXR 117.1 113.2 111.6 109.9 109.3 108.0 106.2 106.5 105.3
Narrow net external debt/CAR 14.8 10.6 1.0 (3.1) (1.7) (5.5) (7.1) (8.9) (9.9)
GG balance/GDP (6.1) (2.8) (1.6) 0.4 (0.3) (0.1) (0.2) (0.2) (0.0)
GG net debt/GDP 33.5 34.3 36.9 36.6 36.4 35.5 34.6 33.8 32.8
CPI inflation 2.2 (0.9) (0.3) (0.3) 4.6 3.3 2.2 2.2 2.2
Bank credit to resident private sector/GDP 60.8 57.5 56.9 57.3 56.6 56.6 56.6 56.6 56.6
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Bahamas (BB+/Stable/B)

  • Analyst: jennifer.love@spglobal.com
  • Latest publication: The Commonwealth of The Bahamas, Dec. 18, 2018
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 4
  • External assessment: 6
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 4
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects S&P Global Ratings' expectation that robust political institutions will anchor fiscal consolidation and moderate economic growth over the next one to two years.

We could lower our ratings on The Commonwealth of The Bahamas over this period if public finances do not improve as quickly as expected. This could result from stagnant economic growth, external shocks, or weakened political commitment. The lack of confidence that this may generate could push debt costs higher, leading to a downgrade.

Conversely, we could raise the ratings over the same timeframe if the government reduces the annual increase in general government debt beyond our expectations. This, combined with significantly higher economic growth forecasts, could lead to an upgrade.

(Originally published on Dec. 18, 2018)

Table 5

Bahamas
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 28.6 30.4 30.5 30.7 33.0 33.5 33.7 34.7 35.5
GDP growth 0.7 0.6 0.5 0.1 1.6 0.9 (0.7) 1.9 1.6
GDP per capita growth (0.6) (0.6) (0.7) (1.0) 6.5 (0.2) (1.7) 0.9 0.3
Current account balance/GDP (20.1) (13.7) (6) (12.4) (12.0) (10.5) (16.3) (11.5) (9.8)
Gross external financing needs/CAR&FXR 1,422.2 812.0 433.7 311.0 275.7 249.5 272.5 281.6 275.8
Narrow net external debt/CAR 43.3 47.1 33.6 45.5 43.0 33.4 51.7 54.6 55.5
GG balance/GDP (3.5) (2.6) (5.7) (3.5) (1.8) (5.4) (4.3) (2.4) (1.7)
GG net debt/GDP 37.2 37.3 39.8 46.2 48.8 49.1 53.8 56.1 56.6
CPI inflation 1.5 1.9 (0.4) 1.5 3.1 1.9 2.2 2.1 2.1
Bank credit to resident private sector/GDP 61.6 56.5 53.7 50.8 49.8 48.1 47.8 46.3 45.0
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Barbados (B-/Stable/B)

  • Analyst: julia.smith@spglobal.com
  • Latest publication: Barbados Long-Term Foreign Currency Rating Raised To 'B-' From 'SD' On Debt Exchange, Jan. 13, 2020
Rating score snapshot
  • Institutional assessment: 5
  • Economic assessment: 5
  • External assessment: 6
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 5
  • Monetary assessment: 6
Outlook: Stable

The stable outlook balances the administration's strong mandate to implement broad fiscal and macroeconomic reforms with the political and economic challenges of doing so. Multilateral lending institutions, which we expect will continue to commit and disburse financial and technical assistance to Barbados, will also support the government's mandate. We expect over the next 12-18 months the government will continue to implement policies that achieve fiscal consolidation and institutional safeguards, while strengthening macroeconomic stability.

Failure to meet fiscal and debt targets over the next year could weaken investor confidence and result in a loss of official capital inflows. This outcome could place renewed pressure on the country's foreign exchange reserves and reduce funding sources. Under this scenario of diminished liquidity, we could lower the ratings.

We could raise the ratings over the next year should the government adhere to its ambitious fiscal targets and reform agenda, which could strengthen investor confidence and contribute to improved GDP growth prospects. Higher economic growth would facilitate a reduced debt burden, which, together with an expectation of continued access to official funding, could lead us to raise the rating.

(Originally published on Dec. 11, 2019)

Table 6

Barbados
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 16.8 16.8 17.2 17.4 17.7 18.0 18.3 18.9 19.4
GDP growth 0.0 2.4 2.6 0.6 (0.4) (0.1) 0.6 1.0 1.0
GDP per capita growth (0.4) 2.0 2.2 (0.9) (0.8) (0.5) 0.2 0.6 0.6
Current account balance/GDP (9.2) (6.1) (4.3) (3.8) (3.4) (3.9) (3.6) (3.5) (3.0)
Gross external financing needs/CAR&FXR 162.8 155.1 172.1 208.3 227.4 209.0 183.1 176.5 172.6
Narrow net external debt/CAR 58.9 61.9 61.4 64.9 79.3 64.4 56.1 50.1 45.6
GG balance/GDP (5.6) (6.6) (3.4) (3.2) (9.1) 1.5 1.6 2.6 2.1
GG net debt/GDP 122.9 132.5 138.7 136.6 113.7 111.2 108.0 103.4 98.0
CPI inflation 1.8 (1.1) 1.5 4.4 3.7 1.9 1.8 2.3 2.3
Bank credit to resident private sector/GDP 63.5 62.8 62.0 60.6 58.4 58.3 58.3 58.3 58.2
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Belize (B-/Stable/B)

  • Analyst: livia.honsel@spglobal.com
  • Latest publication: Belize, Aug. 14, 2019
Rating score snapshot
  • Institutional assessment: 6
  • Economic assessment: 6
  • External assessment: 6
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 6
  • Monetary assessment: 5
Outlook: Stable

The stable outlook incorporates S&P Global Ratings' expectation for broad economic and fiscal policy continuity over the coming year. However, we perceive risks of fiscal slippage as we approach the general election in November 2020, in the absence of broader consolidation measures. Steady tourism revenues will sustain moderate economic growth, although Belize remains vulnerable to weather conditions.

We could lower the ratings over the next two years if Belize reverses the trend of fiscal consolidation. This could lead to renewed liquidity pressures and a higher likelihood that the government will delay future interest payments on its commercial debt.

On the other hand, we could raise the ratings if lower fiscal deficits result in a decline of Belize's debt burden beyond our expectations, coupled with a strengthening of its external profile. In addition, an improvement of Belize's institutional and economic profile would come from a track record of better debt payment, combined with more effective economic decision-making, which would entail reforms that strengthen Belize's economic growth prospects significantly.

(Originally published on Aug. 14, 2019)

Table 7

Belize
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 4.7 4.8 4.8 4.8 4.8 4.8 4.9 4.9 5.0
GDP growth 3.7 3.4 (0.6) 1.4 3.0 2.5 1.8 1.9 1.9
GDP per capita growth 1.0 0.8 (3.1) (1.2) 0.4 (0.1) (0.8) (0.7) (0.7)
Current account balance/GDP (7.6) (9.8) (8.4) (7.7) (7.9) (7.5) (7.2) (6.8) (6.5)
Gross external financing needs/CAR&FXR 118.3 122.0 136.6 141.6 137.2 131.7 132.0 132.1 130.9
Narrow net external debt/CAR 55.7 64.9 75.0 83.7 77.8 76.4 77.0 75.0 72.8
GG balance/GDP (3.9) (7.4) (4.0) (1.7) (1.0) (2.2) (2.8) (2.2) (2)
GG net debt/GDP 64.9 74.4 80.9 86.9 84.7 84.5 84.9 83.9 82.8
CPI inflation 1.2 (0.9) 0.7 1.2 0.3 0.2 1.0 1.8 1.8
Bank credit to resident private sector/GDP 56.7 57.3 55.5 54.0 54.9 54.9 54.9 54.9 54.9
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Bermuda (A+/Positive/A-1)

  • Analyst: stephen.ogilvie@spglobal.com
  • Latest publication: Bermuda Ratings Affirmed At 'A+' On Continuing Sustained Economic Growth, Near-Balanced Fiscal Results; Outlook Positive, Nov. 6, 2019
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 2
  • External assessment: 3
  • Fiscal assessment, budget performance: 1
  • Fiscal assessment, debt: 3
  • Monetary assessment: 5
Outlook: Positive

The positive outlook reflects at least a one-in-three chance that we could raise the ratings by one notch in the next 12 months. Positive economic developments, such as the introduction of new one-time construction projects to support growth beyond 2021, continued momentum in tourism, or expansion of the international financial services (IFS) sector, could lead us to believe that Bermuda's economy has transitioned to a more sustainable growth path. This, coupled with the government remaining disciplined and extending its record of fiscal prudence, could put the territory on a path to building a net creditor position that is more resilient to unexpected shocks. We could raise the ratings as a result.

A loss of momentum in tourist demand or unexpected weakness in Bermuda's IFS sector, as a result of sector uncertainty or material job losses tied to the sector's ongoing consolidation, could lead to flat or negative real growth. These events could constrain revenue growth, leading to a slower-than-expected fiscal recovery and higher debt, and delay the return to net creditor status indefinitely or for a prolonged period. Under such a scenario, we could revise the outlook to stable within the next 12 months.

(Originally published on Nov. 6, 2019)

Table 8

Bermuda
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 87.0 90.2 95.5 98.1 99.5 101.9 104.2 106.6 109.1
GDP growth (0.4) 0.4 (0.1) 2.5 0.1 1.1 0.8 0.8 0.8
GDP per capita growth (0.5) 0.3 2.2 2.4 0.0 1.0 0.8 0.8 0.9
Current account balance/GDP 14.0 15.1 13.7 13.7 15.5 12.3 12.0 11.6 11.2
Gross external financing needs/CAR&FXR 353.6 341.2 354.9 332.3 317.6 213.1 212.8 212.2 211.6
Narrow net external debt/CAR (48.9) (54.3) (53.9) (56.9) (54.2) (55.8) (58.7) (61.8) (64.9)
GG balance/GDP (4.6) (3.2) (2.9) (1.8) (1.5) 0.2 0.4 0.6 0.6
GG net debt/GDP (7.5) (5.4) (2.8) (0.6) 2.6 1.9 0.5 (1.0) (2.5)
CPI inflation 2.0 1.8 1.8 1.9 1.4 1.5 1.5 1.5 1.5
Bank credit to resident private sector/GDP 146.2 144.6 144.0 135.8 124.5 124.9 125.7 126.5 127.2
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Bolivia (BB-/Negative/B)

  • Analyst: carolina.caballero@spglobal.com
  • Latest publication: Bolivia Outlook Revised To Negative On Risks To External And Debt Positions; 'BB-' Sovereign Ratings Affirmed, Dec. 16, 2019
Rating score snapshot
  • Institutional assessment: 5
  • Economic assessment: 5
  • External assessment: 3
  • Fiscal assessment, budget performance: 6
  • Fiscal assessment, debt: 2
  • Monetary assessment: 4
Outlook: Negative

The negative outlook reflects the at least one-in-three likelihood of a downgrade in the next six to 18 months if continued political uncertainty, poor GDP growth prospects, or further erosion of the government's fiscal metrics contributes to current account deficits (CADs) that weaken the country's external profile. The uncertainty caused by the national elections in 2019, followed by protests and a change in political leadership, has, in our opinion, weakened the country's macroeconomic pillars, resulting in higher government debt and potentially greater vulnerability to negative external shocks. Persistent CADs in recent years have eroded Bolivia's once large external buffers, while large budget deficits have worsened its fiscal and debt profile.

The ability of the current interim government, and the new government that is expected to take office early next year, to undertake timely corrective economic policies could be limited by a polarized political situation and social tensions. Failure to staunch fiscal erosion and reduce policy uncertainty could damage the country's external liquidity buffers, as well as its GDP growth prospects, resulting in a downgrade.

We could revise the outlook to stable in the next 12-18 months if there is a successful transition to a new government in early 2020 that sets the stage for corrective fiscal and other economic policies that stabilize the economy and directly address fiscal and external imbalances, including staunching a recent fall in foreign exchange reserves.

(Originally published on Dec. 16, 2019)

Table 9

Bolivia
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 3.1 3.1 3.1 3.4 3.6 3.8 3.8 3.9 3.9
GDP growth 5.5 4.9 4.3 4.2 4.2 2.5 1.4 2.5 2.5
GDP per capita growth 3.8 3.3 2.7 2.7 2.7 1.0 (0.1) 1.0 1.0
Current account balance/GDP 1.7 (5.9) (5.7) (5.0) (4.7) (5.5) (5.1) (4.1) (3.3)
Gross external financing needs/CAR&FXR 54.5 56.7 59.5 71.3 71.7 78.7 89.5 91.0 94.1
Narrow net external debt/CAR (67.0) (70.3) (45.7) (27.4) (6.6) 16.3 25.0 29.5 31.9
GG balance/GDP (2.5) (4.5) (3.0) (5.0) (6.0) (6.1) (5.2) (4.5) (4)
GG net debt/GDP 8.3 13.9 16.4 22.4 24.6 29.3 33.4 37.2 39.9
CPI inflation 5.8 4.1 3.6 2.8 2.3 3.4 2.5 2.5 3.0
Bank credit to resident private sector/GDP 44.7 52.9 59.7 60.1 62.2 63.4 63.1 62.9 62.7
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Brazil (BB-/Positive/B)

  • Analyst: livia.honsel@spglobal.com
  • Latest publication: Brazil Outlook Revised To Positive On Prospects For Sustained Fiscal Improvements; 'BB-/B' Ratings Affirmed, Dec. 11, 2019
Rating score snapshot
  • Institutional assessment: 4
  • Economic assessment: 5
  • External assessment: 3
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 5
  • Monetary assessment: 3
Outlook: Positive

The positive outlook reflects prospects for an upgrade in the next two years if further progress--prioritization, passage, or execution--on the government's broad fiscal and growth agenda allows for a more rapid reduction of Brazil's fiscal deficits and a stabilization of debt dynamics.

We could also upgrade Brazil if real GDP growth dynamics begin comparing more favorably with peers with a similar level of economic development. Finally, we could raise the ratings if, contrary to our expectations, Brazil's sound external profile strengthens further, despite global volatility, particularly if it maintains a net narrow external creditor position in the coming two years.

Alternatively, policy or economic developments that undermine the passage and implementation of additional corrective reforms in the next two years, harming the prospects for declining government deficits and stabilizing debt trends as well as limiting medium-term growth prospects, would lead us to revise the outlook to stable.

(Originally published on Dec. 11, 2019)

Table 10

Brazil
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 12.1 8.8 8.7 9.9 9.0 8.7 8.7 9.0 9.5
GDP growth 0.5 (3.6) (3.3) 1.4 1.3 1.0 2.0 2.2 2.5
GDP per capita growth (0.4) (4.3) (4.1) 0.5 0.5 0.3 1.3 1.5 1.9
Current account balance/GDP (4.1) (3.0) (1.4) (0.7) (2.2) (2.9) (2.9) (2.8) (2.8)
Gross external financing needs/CAR&FXR 75.5 70.8 64.7 63.0 63.7 68.2 67.9 68.1 68.1
Narrow net external debt/CAR 31.1 9.7 (0.9) (6.4) (8.5) 1.6 7.4 11.9 17.3
GG balance/GDP (5.8) (10.1) (8.9) (7.7) (7.1) (5.9) (5.7) (5.6) (5.4)
GG net debt/GDP 44.6 49.8 52.4 56.5 57.4 61.0 64.5 67.3 69.5
CPI inflation 6.3 9.0 8.7 3.5 3.7 3.6 3.3 3.8 3.9
Bank credit to resident private sector/GDP 62.3 64.8 59.7 53.6 52.0 53.2 54.5 55.3 56.0
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Canada (AAA/Stable/A-1+)

  • Analyst: paul.judson@spglobal.com
  • Latest publication: Canada, Nov. 14, 2019
Rating score snapshot
  • Institutional assessment: 1
  • Economic assessment: 1
  • External assessment: 2
  • Fiscal assessment, budget performance: 1
  • Fiscal assessment, debt: 3
  • Monetary assessment: 1
Outlook: Stable

The stable outlook reflects our expectation that high wealth, economic diversification, and ample fiscal and monetary buffers will help Canada adjust to weaker U.S. growth and domestic challenges over the next two years. We also expect trade and investment flows to remain largely intact, regardless of the outcome of the proposed United States-Mexico-Canada agreement (USMCA). In addition, we expect policymaking to remain broadly supportive of sustainable public finances, given the bipartisan commitment to fiscal prudence embedded in the preelection platforms of the major federal parties, and planned deficit-reduction measures at the provincial level, in Alberta and Ontario. We expect this will result in a slow improvement in Canada's already-low net general government deficit and, in turn, a gradual decline in net general government debt to GDP.

While unlikely over the next two years, a major shock that triggered an abrupt fall in house prices could hurt GDP growth. This, combined with a sluggish or inadequate response by policymakers, could contribute to wider fiscal deficits and rising debt. Under this unexpected scenario, we could lower the ratings due to the resulting substantial worsening of Canada's financial profile.

(Originally published on Nov. 14, 2019)

Table 11

Canada
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 50.9 43.6 42.4 45.2 46.2 46.4 49.2 51.6 54.0
GDP growth 2.9 0.7 1.1 3.0 1.9 1.5 1.6 2.0 2.2
GDP per capita growth 1.8 (0.1) (0.0) 1.8 0.5 0.4 0.5 0.9 1.1
Current account balance/GDP (2.4) (3.5) (3.2) (2.8) (2.6) (2.0) (1.8) (1.6) (1.4)
Gross external financing needs/CAR&FXR 159.3 180.1 170.5 168.2 164.5 168.7 166.2 164.9 164.1
Narrow net external debt/CAR 99.9 118.5 129.7 122.4 108.5 113.3 114.8 117.1 119.9
GG balance/GDP 0.2 (0.0) (0.4) (0.3) (0.3) (0.9) (0.3) (0.6) (0.6)
GG net debt/GDP 39.6 40.9 42.0 38.2 37.8 37.3 36.2 35.3 34.5
CPI inflation 1.9 1.1 1.4 1.6 2.2 2.0 2.1 2.0 2.2
Bank credit to resident private sector/GDP 151.4 165.0 169.7 172.8 177.4 176.4 176.0 175.9 175.3
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Chile (A+/Stable/A-1)

  • Analyst: manuel.orozco@spglobal.com
  • Latest publication: Chile, June 27, 2019
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 4
  • External assessment: 4
  • Fiscal assessment, budget performance: 2
  • Fiscal assessment, debt: 1
  • Monetary assessment: 2
Outlook: Stable

The stable outlook on Chile reflects S&P Global Ratings' expectation for continuity in economic policy over the coming three years. We expect Chile to maintain the distinctive pillars of its market economy (fiscal and monetary rules, openness to trade and investment, judicial security, and predictability) while it strengthens social policies. At the same time, we expect continued GDP growth, moderate current account deficits (CADs), and low inflation will stabilize Chile's public finances and its external profile.

We could lower the rating in the next couple of years if a combination of unexpectedly loose fiscal policy and lower economic growth than we expect results in larger-than-expected fiscal deficits. That could contribute to annual increases in general government debt beyond our projections. A substantial and prolonged weakening of public finances could cause us to downgrade the sovereign. Similarly, an unexpected deterioration in Chile's net external position or a substantial increase in its gross external financing needs could weaken its external profile, which would also lead to a lower rating.

Conversely, a sustained recovery in GDP growth, along with prudent fiscal and monetary policies, would gradually strengthen Chile's economic base and reduce its external vulnerabilities. A more resilient economy, thanks to continued prosperity and diversification, could result in a higher rating in the next couple of years.

(Originally published on June 27, 2019)

Table 12

Chile
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 14.6 13.6 13.7 15.0 15.9 15.0 14.8 15.6 16.5
GDP growth 1.8 2.3 1.7 1.3 4.0 2.0 2.4 2.9 3.0
GDP per capita growth 0.7 1.2 0.4 (0.2) 2.6 0.8 1.5 2.5 2.8
Current account balance/GDP (1.7) (2.3) (1.6) (2.2) (3.1) (3.4) (3.3) (2.9) (2.8)
Gross external financing needs/CAR&FXR 99.5 102.0 107.9 110.0 116.7 116.7 119.2 120.3 120.3
Narrow net external debt/CAR 21.5 29.2 25.4 34.7 42.5 45.0 48.7 48.5 48.2
GG balance/GDP (1.5) (2.1) (2.7) (2.6) (1.5) (3.9) (4.6) (4.1) (3.6)
GG net debt/GDP 0.7 2.7 7.1 10.8 12.9 15.5 18.4 20.4 21.8
CPI inflation 4.7 4.4 3.8 2.2 2.4 2.3 2.9 3.0 3.0
Bank credit to resident private sector/GDP 81.9 85.3 84.6 82.4 86.1 88.4 90.8 93.2 95.7
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Colombia (BBB-/Stable/A-3)

  • Analyst: manuel.orozco@spglobal.com
  • Latest publication: Colombia 'BBB-/A-3' Foreign Currency Sovereign Ratings Affirmed; Outlook Remains Stable, Oct. 28, 2019
Rating score snapshot
  • Institutional assessment: 3
  • Economic assessment: 4
  • External assessment: 5
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 4
  • Monetary assessment: 3
Outlook: Stable

The stable outlook assumes that Colombia's external profile will continue to improve from an earlier deterioration as current account receipts (CAR) continue to slowly recover and foreign direct investment largely funds wide current account deficits (CADs). We also assume that the government will be able to secure Congressional approval of the 2018 financing law, after it was rejected by the courts on procedural grounds. That, along with modestly higher GDP growth and active expenditure management, should marginally reduce pressures on Colombia's fiscal accounts and stabilize its indebtedness level during 2019-2021.

We could lower the rating over the coming one to two years if the projected improvement in Colombia's external profile fails to materialize, or if access to external market financing deteriorates. Moreover, a potential worsening of political dynamics, including signs of less effective and less timely actions taken by the executive and legislative branches of government to address fiscal and economic challenges, could weaken our assessment of Colombia's institutional effectiveness and policy pragmatism. We could lower the rating as a result.

Conversely, we could upgrade Colombia over the next two years if a broadening of its export base and smaller CADs reduce external vulnerabilities faster than we expect, coupled with faster GDP growth than its rating peers. The resulting improvement in its external profile and growth prospects should also contribute to fiscal consolidation.

(Originally published on Oct. 28, 2019)

Table 13

Colombia
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 8.3 6.3 6.0 6.5 6.9 6.6 6.7 7.0 7.4
GDP growth 4.7 3.0 2.1 1.4 2.6 3.2 3.2 3.3 3.3
GDP per capita growth 3.6 1.9 1.0 0.3 1.5 2.1 2.1 2.2 2.2
Current account balance/GDP (5.2) (6.3) (4.3) (3.3) (3.9) (4.0) (3.9) (3.7) (3.6)
Gross external financing needs/CAR&FXR 98.2 95.7 88.8 94.1 97.8 97.9 95.8 95.4 96.0
Narrow net external debt/CAR 66.2 97.6 123.8 117.5 113.1 108.2 104.9 102.1 98.3
GG balance/GDP (1.5) (3) (2.8) (2.3) (2.0) (1.8) (1.6) (1.8) (2.0)
GG net debt/GDP 29.7 34.5 34.9 36.5 40.2 40.1 39.4 38.8 38.4
CPI inflation 2.9 5.0 7.5 4.3 3.2 3.6 3.1 3.0 3.0
Bank credit to resident private sector/GDP 44.4 49.5 50.3 52.7 51.1 51.6 52.6 53.6 54.7
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Costa Rica (B+/Negative/B)

  • Analyst: cesar.barceinas@spglobal.com
  • Latest publication: Costa Rica Long-Term Ratings Lowered To 'B+' On Worse Debt And External Risk; Outlook Is Negative, Dec. 21, 2018
Rating score snapshot
  • Institutional assessment: 4
  • Economic assessment: 4
  • External assessment: 5
  • Fiscal assessment, budget performance: 6
  • Fiscal assessment, debt: 5
  • Monetary assessment: 5
Outlook: Negative

The negative outlook reflects an at least one-in-three chance of another downgrade in the next six to 24 months because of greater-than-expected erosion of the government's debt burden or signs of weakening access to liquidity due to external shocks or poor debt management. Failure to effectively implement recent tax reform, and to implement additional fiscal measures if needed, could result in a continuous increase in the net general government debt burden, contributing to higher interest expenses. That, combined with rigidities in debt management and an already high level of sovereign debt denominated in foreign currency, could raise the sovereign's vulnerability to external and other shocks, leading to a downgrade.

Conversely, we could revise the outlook to stable over the same period if the government is able to reduce its fiscal deficit sufficiently to gradually stabilize its debt burden, contain interest costs, and undertake more effective debt management to reduce its exposure to potential adverse movements in interest rates and the exchange rate. Such steps, along with continued economic growth, could boost investor confidence, sustain foreign direct investment, and reduce the country's external vulnerability.

(Originally published on Dec. 21, 2018)

Table 14

Costa Rica
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 10.6 11.3 11.6 11.7 12.0 11.8 11.7 11.7 11.6
GDP growth 3.5 3.6 4.3 3.4 2.6 1.7 2.4 2.8 2.9
GDP per capita growth 2.2 2.4 3.0 2.2 1.4 0.5 1.2 1.6 1.7
Current account balance/GDP (4.9) (3.5) (2.2) (3.0) (3.1) (3.4) (3.3) (4.0) (4.2)
Gross external financing needs/CAR&FXR 101.4 99.9 98.7 105.6 108.0 108.8 108.3 108.6 110.4
Narrow net external debt/CAR 42.9 58.7 58.8 57.3 61.1 63.0 64.4 67.2 70.4
GG balance/GDP (5.5) (5.7) (4.8) (5.5) (5.1) (5.7) (6.2) (5.9) (5.6)
GG net debt/GDP 40.3 42.9 45.5 47.3 51.8 55.8 59.7 62.7 65.1
CPI inflation 5.1 (0.8) 0.8 2.6 2.0 2.1 2.4 2.7 2.9
Bank credit to resident private sector/GDP 61.2 64.8 68.8 70.8 70.8 70.6 71.0 71.3 71.6
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Curacao (BBB+/Stable/A-2)

  • Analyst: manuel.orozco@spglobal.com
  • Latest publication: Curacao Long-Term Sovereign Ratings Lowered To 'BBB+' On Increased Fiscal Pressures; Outlook Is Stable, Feb. 18, 2019
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 4
  • External assessment: 2
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 1
  • Monetary assessment: 6
Outlook: Stable

The stable outlook reflects our expectation that Curacao will commit to fiscal adjustment during the next two to three years, maintaining access to financing from the Netherlands. It also incorporates our expectation for disruptions in the operation of the "La Isla" oil refinery during 2019. We assume that Curacao would find a business partner for the refinery after the current lease agreement with Petróleos de Venezuela S.A. (PDVSA) expires in December 2019. Moreover, the stable outlook reflects our view that Curacao will continue to benefit from its strong net external asset position (thanks to pension fund external assets) and the predictability of the long-standing local currency peg with the U.S. dollar.

We could raise the ratings over the next 12-24 months if Curacao were able to post sustained economic growth through a rise in tourism, recovery in activity in the oil refinery, and passage of structural reforms. We could also raise the ratings in the event of a substantial improvement in fiscal performance, along with improved transparency of fiscal accounts.

We could lower the ratings over the next 12-24 months if failure to secure a new operator of the oil refinery further worsens Curacao's already poor GDP growth prospects after 2019. Under this scenario, we would expect the economic recession to continue beyond 2020, which could lead to worse fiscal outcomes and further increases in debt, as well as more potential government arrears to the pension fund. We would also lower the rating if Curacao's ties with the Netherlands were to deteriorate, bringing more uncertainty to the availability of external funding.

(Originally published on Feb. 18, 2019)

Table 15

Curacao
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 20.6 20.3 19.9 19.9 20.0 20.1 20.1 20.2 20.4
GDP growth (1.1) 0.3 (1.0) (1.7) (2.2) (1.5) (0.5) 0.0 0.3
GDP per capita growth (0.1) (1.1) (1.9) (1.7) (2.0) (2.0) (1.0) (0.4) (0.0)
Current account balance/GDP (16.0) (16.5) (18.7) (21.9) (28.7) (26.2) (24.2) (22.2) (20.2)
Gross external financing needs/CAR&FXR 109.9 111.7 124.5 122.1 136.2 139.8 138.4 138.5 138.4
Narrow net external debt/CAR (45.9) (53.3) (49.3) (55.3) (53.3) (47.8) (39.9) (34.1) (28.5)
GG balance/GDP (1.0) (4.6) (2.9) 1.1 (3.0) (3.0) (3.0) (3.0) (3.0)
GG net debt/GDP (38.9) (37.8) (38.3) (35.7) (27.5) (24.2) (21.1) (17.9) (14.6)
CPI inflation 1.5 (0.5) 0.0 1.6 2.6 2.5 1.0 1.0 1.0
Bank credit to resident private sector/GDP 75.9 75.9 84.9 86.4 87.3 87.3 87.3 87.2 87.2
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Dominican Republic (BB-/Stable/B)

  • Analyst: cesar.barceinas@spglobal.com
  • Latest publication: Dominican Republic, April 16, 2019
Rating score snapshot
  • Institutional assessment: 5
  • Economic assessment: 3
  • External assessment: 5
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 5
  • Monetary assessment: 4
Outlook: Stable

The stable outlook balances S&P Global Ratings' expectation that the Dominican Republic will continue to grow at an average of 5% annually during the next three years. We don't expect the current administration to tackle long-standing structural deficiencies in the fiscal and energy sectors during the remainder of its term, despite their importance in lessening the sovereign's fiscal and external vulnerabilities.

We could raise the ratings if the government takes steps to improve structural fiscal trends, such as through energy-sector reform, tackling the quasi-deficit of the central bank, or central government fiscal reform. Lower fiscal deficits, coupled with sustained improvement in external liquidity ratios, could lead to an upgrade during the next two years.

We could lower our ratings if policy decisions or adverse external conditions generate lower potential GDP growth during the next two years. Also, we could lower our ratings if the Dominican Republic doesn't grow faster than peers with a similar level of economic development, which would weigh on fiscal dynamics.

(Originally published on April 16, 2019)

Table 16

Dominican Republic
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 6.8 7.1 7.5 7.9 8.3 8.7 9.1 9.4 9.8
GDP growth 7.1 6.9 6.7 4.7 7.0 5.0 5.0 5.0 5.0
GDP per capita growth 6.0 5.9 5.7 3.7 6.0 4.1 4.1 4.1 4.1
Current account balance/GDP (3.2) (1.8) (1.1) (0.2) (1.4) (1.8) (2.2) (2.5) (2.6)
Gross external financing needs/CAR&FXR 111.7 109.4 104.6 100.2 100.9 99.6 100.6 102.0 103.0
Narrow net external debt/CAR 87.0 81.1 80.4 80.9 75.4 78.0 78.8 79.2 78.9
GG balance/GDP (5.1) (4.5) (4.0) (4.4) (3.7) (3.8) (4.1) (3.6) (3.9)
GG net debt/GDP 41.3 41.0 43.1 44.5 45.3 46.2 47.3 47.8 48.4
CPI inflation 1.6 2.3 1.7 4.2 1.2 2.4 4.0 4.0 4.0
Bank credit to resident private sector/GDP 24.7 26.5 27.3 28.0 27.7 27.7 27.7 27.7 27.7
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Ecuador (B-/Stable/B)

  • Analyst: livia.honsel@spglobal.com
  • Latest publication: Ecuador 'B-/B' Ratings Affirmed; Outlook Remains Stable, Jan. 28, 2019
Rating score snapshot
  • Institutional assessment: 6
  • Economic assessment: 5
  • External assessment: 6
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 4
  • Monetary assessment: 6
Outlook: Stable

The stable outlook is based on S&P Global Ratings' expectation that Ecuador will continue its fiscal consolidation program to meet its deficit reduction targets and slow the increase of its debt burden. We also assume broad political and social stability after the March local elections that will support the government's economic policies. Despite uncertain sources of financing, we expect the government to ensure financing from both official and commercial external lenders ahead of the large principal payment on its sovereign bonds that start in March 2020.

Our base case is that Ecuador will negotiate an agreement with the International Monetary Fund (IMF) later this year, which will help sustain investor confidence and contribute to covering the government's financing needs and support the level of international reserves.

Downward pressure on the rating could arise in the next 12 months if liquidity pressures become more acute, either because larger fiscal and external imbalances exceed our expectations, the government's access to markets is hampered by tighter global financing conditions, or official lending falls below the government projections. Liquidity pressures would undermine the government's debt service payment capabilities.

Conversely, we could raise the ratings over the next 12 months if the government accelerates the pace of fiscal adjustment and implements measures to consolidate its public finances in a more sustainable way, leading to stronger economic prospects over the medium term and to an improvement in the country's external liquidity position.

(Originally published on Jan. 28, 2019)

Table 17

Ecuador
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 6.4 6.1 6.1 6.2 6.4 6.3 6.3 6.4 6.5
GDP growth 3.8 0.1 (1.2) 2.4 1.4 (0.5) 0.2 1.2 1.8
GDP per capita growth 2.2 (1.5) (2.7) 0.9 (0.1) (1.9) (1.2) (0.2) 0.4
Current account balance/GDP (0.7) (2.2) 1.3 (0.5) (1.4) 0.0 0.8 0.3 0.4
Gross external financing needs/CAR&FXR 108.6 120.0 113.5 117.2 127.5 121.9 111.7 117.4 117.5
Narrow net external debt/CAR 41.8 76.2 97.1 119.6 122.6 114.7 118.4 121.2 111.4
GG balance/GDP (5.5) (4.5) (5.7) (5.0) (2.0) (1.7) (1.7) (1.7) 0.3
GG net debt/GDP 25.1 29.4 37.2 43.8 44.8 47.0 46.4 46.8 41.1
CPI inflation 3.6 4.0 1.7 0.4 (0.2) 0.5 1.2 1.7 1.3
Bank credit to resident private sector/GDP 28.8 28.9 30.1 33.6 36.3 38.8 39.8 41.0 43.0
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

El Salvador (B-/Stable/B)

  • Analyst: cesar.barceinas@spglobal.com
  • Latest publication: Republic of El Salvador Long-Term Rating Raised To 'B-' On Debt Refinancing Approval; Outlook Is Stable, Dec. 28, 2018
Rating score snapshot
  • Institutional assessment: 6
  • Economic assessment: 5
  • External assessment: 5
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 5
  • Monetary assessment: 6
Outlook: Stable

The stable outlook reflects our expectation of consistently moderate fiscal deficits and stable debt levels, along with consistent, albeit moderate, economic growth in the next three years. Faster-than-expected economic growth and a stronger fiscal and external stance that ultimately reflects in declining debt levels could lead us to raise the ratings within the next 12-24 months.

In contrast, we could lower the ratings if its economic performance deteriorates significantly, so that its GDP per capita grows less than 1.5% annually, along with fiscal deficits consistently above 4% of GDP, and if the country faces additional challenges in accessing external financing in the next 12-24 months.

(Originally published on Dec. 28, 2018)

Table 18

El Salvador
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 3.6 3.7 3.8 3.9 4.1 4.2 4.4 4.5 4.7
GDP growth 1.7 2.4 2.5 2.3 2.5 2.3 2.5 2.5 2.5
GDP per capita growth 1.2 1.9 2.0 1.8 2.0 1.8 2.0 2.0 2.0
Current account balance/GDP (5.4) (3.2) (2.3) (1.9) (4.8) (4.5) (4.6) (4.6) (4.6)
Gross external financing needs/CAR&FXR 94.1 92.9 92.3 90.5 95.9 101.1 101.5 101.9 102.2
Narrow net external debt/CAR 94.1 84.5 90.6 89.5 78.7 78.0 76.1 74.0 70.8
GG balance/GDP (4.0) (3.6) (3.1) (2.5) (2.7) (3.1) (3.1) (3.0) (3.0)
GG net debt/GDP 62.7 64.1 65.5 66.3 65.9 66.9 66.9 66.8 66.9
CPI inflation 0.5 1.0 (0.9) 2.0 0.4 0.2 2.3 2.1 2.1
Bank credit to resident private sector/GDP 51.7 52.4 53.4 54.2 55.6 55.6 55.6 55.6 55.5
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Guatemala (BB-/Stable/B)

  • Analyst: omar.delatorre@spglobal.com
  • Latest publication: Guatemala 'BB-/B' Foreign Currency Sovereign Ratings Affirmed; Outlook Remains Stable, Dec. 3, 2019
Rating score snapshot
  • Institutional assessment: 4
  • Economic assessment: 6
  • External assessment: 3
  • Fiscal assessment, budget performance: 4
  • Fiscal assessment, debt: 4
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects our expectation of continuity in key economic policies following the change of administration in January 2020. We expect Guatemala to maintain low fiscal deficits and sound monetary policy amid still-weak economic growth and a challenging political environment that affects public policy effectiveness. Moreover, we expect that continued cautious fiscal policies should maintain a stable general government debt burden during 2019-2021.

We could lower the ratings on Guatemala over the next 12-24 months if unexpected deterioration in economic policies erodes prospects for economic growth and contributes to worsening public finances. We could also lower our ratings if fiscal slippage results in higher-than-expected annual increases in net general government debt.

Conversely, we could raise the ratings over the next two years if the new administration is able to propose and implement a reform agenda that strengthens Guatemala's governability and public institutions, increases its tax revenues, and bolsters its GDP growth prospects.

(Originally published on Dec. 3, 2019)

Table 19

Guatemala
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 4.2 4.5 4.8 5.2 5.3 5.4 5.9 6.2 6.6
GDP growth 4.2 4.1 3.1 2.8 3.2 3.3 3.5 3.5 3.5
GDP per capita growth 2.3 2.3 1.3 0.9 1.7 1.5 1.7 1.7 1.7
Current account balance/GDP (2.1) (0.2) 1.5 1.6 0.9 0.5 (0.5) (1.2) (1.9)
Gross external financing needs/CAR&FXR 93.2 91.6 88.3 85.3 82.5 81.3 80.4 81.3 83.6
Narrow net external debt/CAR 37.7 39.7 35.0 26.9 19.9 18.9 19.7 22.9 28.8
GG balance/GDP (1.9) (1.4) (1.1) (1.3) (1.8) (2.6) (2.9) (3.0) (3.0)
GG net debt/GDP 19.1 18.5 17.3 16.5 16.2 16.2 18.0 19.6 21.2
CPI inflation 3.0 3.1 4.2 5.7 2.3 3.1 4.2 4.2 4.2
Bank credit to resident private sector/GDP 35.8 37.1 37.1 36.1 35.7 34.1 34.1 34.1 34.1
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Honduras (BB-/Stable/B)

  • Analyst: omar.delatorre@spglobal.com
  • Latest publication: Honduras, July 26, 2019
Rating score snapshot
  • Institutional assessment: 5
  • Economic assessment: 5
  • External assessment: 2
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 4
  • Monetary assessment: 4
Outlook: Stable

The stable outlook on Honduras incorporates S&P Global Ratings' expectation for continuity in economic and investment policies over the coming year and overall political stability. We expect per capita GDP to grow 1.9% on average over the next three years. The government's commitment to fiscal prudence should help keep annual increases in government debt at a moderate level, around 3.4% of GDP. We also expect the government to continue tackling crime and poverty, though progress will likely be very gradual.

We could raise the ratings in the next year if faster-than-expected and effective implementation of energy reform strengthens Honduras' economic growth and fiscal flexibility more than we expect it to. Additionally, an upgrade should be backed by a strengthening in monetary policy credibility, or if we see more effective policymaking and strengthening of public institutions of governance, thereby reducing the risk of instability.

Conversely, we could lower the ratings if political uncertainties and difficulties in passing legislation or implementing reforms raise doubts about the continuity of economic policies. Higher-than-expected fiscal deficits could reverse the recent strengthening of Honduras' financial profile and could lead to larger-than-expected increases in net general government debt over the next couple of years. Similarly, an unexpected deterioration in the current account could weaken the country's currently strong external liquidity position. The combination of weaker public finances and external liquidity could result in a downgrade.

(Originally published on July 26, 2019)

Table 20

Honduras
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 2.3 2.4 2.5 2.6 2.6 2.7 2.8 2.9 3.0
GDP growth 3.1 3.8 3.9 4.8 3.8 3.3 3.4 3.5 3.5
GDP per capita growth 1.5 2.1 2.2 3.1 2.1 1.7 1.8 1.9 1.9
Current account balance/GDP (7.0) (4.7) (2.6) (0.2) (5.3) (4.9) (5.0) (4.9) (4.9)
Gross external financing needs/CAR&FXR 98.2 93.7 92.0 88.9 90.6 92.3 96.4 96.5 99.7
Narrow net external debt/CAR 19.7 20.4 18.6 17.8 20.1 24.1 27.4 30.3 33.5
GG balance/GDP (2.7) (0.8) (0.4) (0.4) 0.2 (0.2) (1.7) (2.2) (2.5)
GG net debt/GDP 32.0 32.5 32.7 34.6 33.5 33.7 34.1 34.9 35.8
CPI inflation 5.8 2.4 3.3 4.7 4.2 4.5 4.5 4.5 4.5
Bank credit to resident private sector/GDP 56.8 56.4 58.6 57.9 63.1 63.2 63.6 63.9 64.3
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Jamaica (B+/Stable/B)

  • Analyst: bhavini.patel@spglobal.com
  • Latest publication: Jamaica Sovereign Credit Rating Raised To 'B+' From 'B' On Improved External Position; Outlook Is Stable, Sept. 27, 2019
Rating score snapshot
  • Institutional assessment: 4
  • Economic assessment: 6
  • External assessment: 4
  • Fiscal assessment, budget performance: 2
  • Fiscal assessment, debt: 6
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects our view that, in the next 12 months, Jamaica's fiscal policy will remain broadly consistent following the expiry of its IMF Stand-by Arrangement (SBA) in November 2019.

We expect that the government will continue to deliver robust primary fiscal surpluses, leading to a gradual reduction in debt and interest burdens, and helping to boost external reserves. We also expect that the country will be able to maintain its growth momentum, with modest GDP growth, and that the government will continue advancing toward a more effective monetary policy framework for the central bank, including a more flexible exchange rate.

(Originally published on Sept. 27, 2019)

Table 21

Jamaica
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 5.1 5.2 5.2 5.4 5.8 6.1 6.3 6.6 6.9
GDP growth 0.7 0.9 1.4 1.0 1.9 1.5 1.9 2.0 2.0
GDP per capita growth 0.5 0.8 1.3 1.0 2.0 1.3 1.7 1.8 1.8
Current account balance/GDP (8.0) (3.0) (0.3) (2.6) (1.8) (1.8) (2.0) (2.0) (1.9)
Gross external financing needs/CAR&FXR 122.7 110.4 94.3 99.5 95.7 97.4 91.7 88.6 80.3
Narrow net external debt/CAR 131.6 114.3 109.9 90.8 76.6 67.2 58.6 50.6 37.9
GG balance/GDP (0.3) (0.2) 0.0 0.7 1.4 0.4 0.7 1.5 1.9
GG net debt/GDP 124.7 113.3 108.4 89.4 82.8 80.5 77.0 73.1 68.0
CPI inflation 8.3 3.7 2.4 4.4 3.7 4.3 4.5 5.0 5.0
Bank credit to resident private sector/GDP 35.8 34.0 39.0 41.5 43.5 45.8 48.0 50.1 52.2
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Mexico (BBB+/Negative/A-2)

  • Analyst: lisa.schineller@spglobal.com
  • Latest publication: Mexico 'BBB+/A-2' Foreign Currency Ratings Affirmed; Outlook Remains Negative, Dec. 19, 2019
Rating score snapshot
  • Institutional assessment: 3
  • Economic assessment: 4
  • External assessment: 2
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 4
  • Monetary assessment: 3
Outlook: Negative

The negative outlook indicates an at least one-in-three possibility of a downgrade over the coming year. Generating more robust and balanced growth across regions in Mexico has been a challenge for policymakers across multiple administrations. Maintaining Mexico's solid fiscal profile while shifting the country's policy priorities depends on bolstering GDP growth prospects, including through higher private investment. The negative outlook reflects the risk that mixed signals emanating from key government policies, such as in the energy sector and in projects reliant on public funding, coupled with perceptions of increased discretion in policy implementation, will continue to erode private-sector sentiment and lower Mexico's trend growth prospects.

If successful in restoring some lost confidence, the National Investment Agreement in Infrastructure by the Private Sector, announced Nov. 26, 2019, to jumpstart private investment, coupled with recent steps in renegotiating the trade deal with the U.S. and Canada (United States–Mexico–Canada Agreement, or USMCA), could create a more positive economic outlook. Absent signs of solid improvement, in our view, Mexico's trend growth performance would likely compare unfavorably with peers, weaken the sovereign's economic profile, and result in a downgrade.

The sovereign's credit quality could also suffer from potential increases in contingent liabilities, mainly from the energy sector. The administration limits private involvement in this sector it deems strategic. The first part of the infrastructure investment initiative recently announced (with over 140 projects totaling Mexican peso [MXN] 710 billion planned from 2020 to 2024) doesn't include the energy sector. A more detailed and complete version of the program should be released in January 2020. Therefore, the potential for private investment in refineries and pipelines, as recently indicated, remains to be seen. Low private investment in the energy sector increases the burden on government-owned energy companies Petroleos Mexicanos (Pemex) and Comision Federal de Electricidad (CFE) to deliver, both of which have a legacy of poor operational and financial performance and technical capacity constraints.

Conversely, effective economic management that maintains moderate fiscal deficits, encourages investment, and raises investor confidence could strengthen GDP growth prospects and maintain stable public finances and fiscal flexibility. That, along with steps to contain the potential contingent liability posed by state-owned companies in the energy sector or broaden the non-oil tax base, could avoid an erosion of the sovereign's financial profile. We could revise the outlook to stable over the coming year in that scenario.

(Originally published on Dec. 19, 2019)

Table 22

Mexico
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 10.9 9.6 8.8 9.3 9.8 10.0 9.8 9.9 10.2
GDP growth 2.8 3.3 2.9 2.1 2.1 0.1 1.0 1.5 1.8
GDP per capita growth 1.5 2.1 1.8 1.0 1.0 (0.9) 0.1 0.6 0.9
Current account balance/GDP (1.9) (2.6) (2.2) (1.7) (1.7) (0.4) (0.9) (1.7) (1.8)
Gross external financing needs/CAR&FXR 91.6 90.2 87.4 85.2 86.7 85.4 83.7 86.1 87.2
Narrow net external debt/CAR 43.1 46.8 40.5 40.6 37.1 33.5 31.2 30.1 29.5
GG balance/GDP (2.5) (2.7) (2.8) (0.8) (1.8) (1.9) (2.2) (2.3) (2.4)
GG net debt/GDP 40.2 42.4 43.5 40.9 40.4 42.0 43.5 44.6 45.2
CPI inflation 4.0 2.7 2.8 6.0 4.9 3.7 3.0 3.0 3.0
Bank credit to resident private sector/GDP 28.7 31.2 33.7 32.8 32.1 32.9 33.7 34.6 35.5
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Montserrat (BBB-/Stable/A-3)

  • Analyst: jennifer.love@spglobal.com
  • Latest publication: Montserrat Sovereign Credit Ratings Affirmed At 'BBB-/A-3'; Outlook Remains Stable, Nov. 7, 2019
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 5
  • External assessment: 3
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 1
  • Monetary assessment: 5
Outlook: Stable

The stable outlook reflects S&P Global Ratings' expectation of continued budgetary and institutional support for Montserrat from the U.K. over the next two years, despite the complex political circumstances surrounding Brexit. We believe that the current political situation continues to preoccupy British policymakers, but that the U.K.'s support for Montserrat remains unchanged, as does its ultimate goal of sustainability. This support will continue to underpin the island's creditworthiness and somewhat mitigate the risks from external vulnerabilities, particularly given the continuing low-level activity of the Soufriere Hills volcano and Montserrat's location in a hurricane belt.

We could lower the ratings over the next two years if the U.K.'s financial support substantially wanes before the domestic economy reaches self-sufficiency. This could increase external liquidity risks arising from Montserrat's significant gross external financing needs. Under this scenario, we expect the loss of a significant portion (up to two-thirds) of government revenue would contribute to large government deficits and could lead to a multi-notch downgrade. The U.K.'s failure to provide timely support in the wake of a natural disaster could exacerbate these risks.

Significant private-sector investment and development on the island could lead us to raise the ratings in the next couple of years. These activities would increase the size and resilience of Montserrat's private economy, broadening the tax base. Sustainable private-sector growth--particularly in tourism and other export sectors--could raise the island's income and reduce the economic concentration in government services. This expansion, along with immigration to build the requisite labor force, would also increase imports. To be sustainable, export growth and foreign direct investment would need to finance this expansion, limiting the increase of net external borrowing from the island's large external financing needs.

(Originally published on Nov. 7, 2019)

Table 23

Montserrat
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 12.3 12.9 13.3 12.7 13.4 13.7 14.1 14.2 14.3
GDP growth 1.6 1.2 1.3 (3.8) 4.0 0.9 1.5 1.4 1.5
GDP per capita growth 2.5 2.0 2.2 (3.0) 4.8 (0.0) 0.6 0.5 0.6
Current account balance/GDP (19.9) (1.3) (11.7) (9.7) (2.0) (7.3) (22.6) (23.1) (9.8)
Gross external financing needs/CAR&FXR 142.2 111.3 136.8 126.8 122.8 129.5 149.9 150.6 135.4
Narrow net external debt/CAR (176.1) (164.4) (193.3) (169.6) (175.6) (181.8) (186.6) (185.7) (186.4)
GG balance/GDP (6.2) 18.8 (0.4) 1.2 (6.5) 0.0 0.0 0.0 0.0
GG net debt/GDP (25.5) (21.4) (19.9) (17.9) (14.8) (13.9) (11.7) (9.6) (7.4)
CPI inflation (0.3) (1.2) (0.4) 1.3 1.4 0.2 0.2 0.2 0.2
Bank credit to resident private sector/GDP 42.2 42.7 47.3 51.9 52.6 50.9 49.1 48.4 47.6
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Nicaragua (B-/Stable/B)

  • Analyst: livia.honsel@spglobal.com
  • Latest publication: Nicaragua Outlook Revised To Stable From Negative On Stabilization Of Liquidity Conditions; 'B-/B' Ratings Affirmed, Nov. 8, 2019
Rating score snapshot
  • Institutional assessment: 5
  • Economic assessment: 6
  • External assessment: 6
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 3
  • Monetary assessment: 6
Outlook: Stable

The stable outlook balances the recent stabilization of liquidity and continuing access to domestic and external funding for the government with enduring political uncertainty, a severe economic contraction, and weaknesses in the financial sector. We expect that the government will implement additional adjustments to monetary and fiscal policy, if needed, to prevent a further erosion of liquidity in the financial system and potential loss of foreign exchange reserves.

We could lower the rating in the next 12-24 months if Nicaragua's access to domestic and external financing deteriorates again, or if worsening political dynamics further strain the exchange rate, undermining domestic confidence and damaging the domestic financial system.

We could raise the ratings over the same period if political and policy developments raise investor confidence, reverse the recent contraction in GDP, and improve access to funding the country's fiscal deficit and debt service payments. A clear track record of strengthening economic and fiscal results and improvement in Nicaragua's external liquidity on a sustainable basis could lead to an upgrade.

(Originally published on Nov. 8, 2019)

Table 24

Nicaragua
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 1.9 2.0 2.1 2.2 2.0 1.9 1.9 1.9 1.9
GDP growth 4.8 4.8 4.6 4.7 (3.8) (5) (1) 1.1 1.5
GDP per capita growth 3.7 3.7 3.5 3.6 (4.8) (6.0) (2.0) 0.1 0.5
Current account balance/GDP (7.1) (9.0) (7.3) (5.6) 0.6 3.6 3.7 2.9 2.5
Gross external financing needs/CAR&FXR 112.9 114.1 106.3 109.4 95.4 97.1 96.7 98.0 98.7
Narrow net external debt/CAR 99.2 101.5 112.5 105.4 116.9 114.5 111.0 110.4 111.3
GG balance/GDP (0.6) (0.8) (1.2) (1.3) (3.1) (1.8) (2.1) (2.3) (2.3)
GG net debt/GDP 33.5 29.9 31.0 32.2 39.4 41.7 43.6 44.8 45.4
CPI inflation 6.0 4.0 3.5 3.9 5.0 5.0 3.5 3.5 3.5
Bank credit to resident private sector/GDP 31.3 34.6 37.1 39.7 38.3 33.1 31.7 30.4 29.0
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Panama (BBB+/Stable/A-2)

  • Analyst: cesar.barceinas@spglobal.com
  • Latest publication: Panama Long-Term Rating Raised To 'BBB+' On Consistently Strong Economic Growth And Stable Fiscal Policy; Outlook Stable, April 29, 2019
Rating score snapshot
  • Institutional assessment: 3
  • Economic assessment: 2
  • External assessment: 5
  • Fiscal assessment, budget performance: 2
  • Fiscal assessment, debt: 2
  • Monetary assessment: 5
Outlook: Stable

The stable outlook reflects our expectation that the next administration will maintain continuity in key policies that have promoted investment and sustained impressive economic growth for the last two decades. The combination of rising prosperity and gradual economic diversification, including the growth of mining, should increase Panama's economic resilience against external shocks. We also expect that continued economic growth and moderate fiscal policies will help stabilize public finances and the country's external liquidity position in the coming three years.

We could lower the ratings over the next two years if there is an unexpected drop in Panama's high economic growth trajectory, or if there is a deterioration in fiscal or external indicators that erodes the country's economic profile. Larger-than-expected increases in government debt or an erosion of Panama's external liquidity could negate the impact of growing prosperity in our assessment of the sovereign's creditworthiness. Similarly, failure to implement recent steps to improve transparency and supervision of the financial system could raise the risk of unexpected contingent liabilities, potentially undermining investor confidence, growth prospects, and public finances. We could lower the rating as a result.

A further improvement in the rating is unlikely in the coming two years. We could raise the rating if Panama maintains rapid GDP growth and if there is a sustained improvement in its external profile, reflected in sharp reductions in external financing requirements. Also, lower-than-expected fiscal deficits that translate into a substantially declining net general government debt and interest burden could lead us to raise the ratings.

(Originally published on April 29, 2019)

Table 25

Panama
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 12.8 13.6 14.4 15.2 15.7 16.0 16.7 17.5 18.5
GDP growth 5.1 5.7 5.0 5.3 3.7 3.5 4.0 4.5 5.0
GDP per capita growth 3.4 4.1 3.4 3.8 2.3 2.1 2.6 3.1 3.6
Current account balance/GDP (13.4) (7.9) (8) (7.9) (7.8) (7.5) (7.7) (7.2) (6.8)
Gross external financing needs/CAR&FXR 181.1 177.5 200.8 194.3 190.1 194.4 190.2 183.5 180.5
Narrow net external debt/CAR 24.3 44.0 51.8 65.3 73.6 70.6 70.2 70.3 70.1
GG balance/GDP (3.4) (2.5) (1.9) (1.9) (2.1) (3.2) (2.6) (2) (2)
GG net debt/GDP 18.0 19.7 20.4 23.7 26.2 28.8 30.2 30.6 30.5
CPI inflation 2.6 0.2 0.7 0.9 0.8 0.2 1.5 2.0 2.0
Bank credit to resident private sector/GDP 78.3 82.2 81.6 81.8 81.7 81.7 81.7 81.7 76.2
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Paraguay (BB/Stable/B)

  • Analyst: patricio.vimberg@spglobal.com
  • Latest publication: Paraguay, June 13, 2019
Rating score snapshot
  • Institutional assessment: 5
  • Economic assessment: 5
  • External assessment: 1
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt: 1
  • Monetary assessment: 5
Outlook: Stable

The stable outlook reflects our expectation that in the next two years Paraguay will continue to post economic growth despite some temporary external and domestic shocks, owing to the exposure of the economy to weather conditions.

We also expect moderate general government deficits in the next three years, contributing to a low debt burden. At the same time, we expect Paraguay's still-evolving political institutions and checks and balances will weigh on policymaking effectiveness.

We could raise our ratings over the next couple of years if we see more effective policymaking and strengthening of public institutions of governance, thereby reducing the risk of instability or unexpected changes in economic policy that undermine confidence. Stronger checks and balances between public institutions and greater predictability and transparency of policy decisions could improve our institutional assessment of Paraguay. We could also raise our ratings if continued diversification of the economy reduces its vulnerability to low commodity prices and adverse weather conditions. Additionally, we could raise our ratings if monetary policy credibility strengthens, contributing to a sustained decline in dollarization in the economy, strengthening the central bank's ability to conduct policy.

On the other hand, poor economic management or unexpected external shocks could undermine GDP growth and reverse the recent strengthening of Paraguay's financial profile. Higher-than-expected fiscal deficits or unexpected currency weakness could lead to larger-than-expected increases in net general government debt over the next couple of years. Similarly, an unexpected deterioration in the current account could weaken the country's currently strong external liquidity position. The combination of weaker public finances and external liquidity, along with potentially growing contingent liabilities--from the financial sector or public-private projects (PPP)--could result in a downgrade.

(Originally published on June 13, 2019)

Table 26

Paraguay
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 6.2 5.5 5.4 5.7 5.9 5.6 5.6 5.8 5.9
GDP growth 4.9 3.1 4.3 5.0 3.7 0.0 3.3 4.0 4.0
GDP per capita growth 3.5 1.7 3.4 3.3 1.9 (1.7) 1.6 2.3 2.3
Current account balance/GDP (0.1) (0.4) 3.6 3.1 0.0 (0.8) (0.1) 0.1 (0.6)
Gross external financing needs/CAR&FXR 82.5 78.8 78.8 76.6 79.4 81.8 79.1 77.3 77.2
Narrow net external debt/CAR (14.0) (6.6) (8.3) (9.0) (0.8) (1.2) (2.1) (4.1) (4.1)
GG balance/GDP (0.6) (1.8) (0.4) (0.9) (1.2) (2.8) (1.8) (1.5) (1.5)
GG net debt/GDP 4.3 6.7 8.6 10.6 11.8 14.2 15.9 17.0 18.1
CPI inflation 5.0 3.1 4.1 3.6 4.0 4.0 4.0 4.0 4.0
Bank credit to resident private sector/GDP 38.4 43.6 41.6 40.6 43.5 43.5 43.5 43.5 43.5
e--Estimate. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Peru (BBB+/Stable/A-2)

  • Analyst: liviahonsel@spglobal.com
  • Latest publication: Peru, March 22, 2019
Rating score snapshot
  • Institutional assessment: 3
  • Economic assessment: 4
  • External assessment: 3
  • Fiscal assessment, budget performance: 2
  • Fiscal assessment, debt: 2
  • Monetary assessment: 3
Outlook: Stable

The stable outlook incorporates S&P Global Ratings' expectation of continuity in economic and fiscal policies over the coming three years. We expect Peru will maintain its distinctive credit strengths (fiscal and monetary policy credibility and a low government debt burden). We expect Peru's economic growth will remain solid in the next two years, mainly as a result of larger private investment spending, particularly in new mining projects.

Lasting political uncertainties and difficulties in passing legislation in Congress would cause a deterioration of Peru's investment environment. A weakening of Peru's institutions that could harm economic growth prospects, potentially leading to a drop in GDP per capita, and the country's efforts to maintain sustainable public finances would lead us to lower the ratings over the next two years.

Over the same period, we could raise the ratings as a result of faster economic growth vis-à-vis peers, underpinned by a successful implementation of investment support measures and more efficient government regulations, as well as fiscal consolidation occurring more quickly than we expect.

(Originally published on March 22, 2019)

Table 27

Peru
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 6.5 6.1 6.1 6.7 6.9 7.0 7.1 7.3 7.6
GDP growth 2.4 3.3 4.0 2.5 4.0 2.4 2.8 3.0 3.5
GDP per capita growth 1.1 2.0 2.7 1.3 2.8 1.2 1.6 1.8 2.3
Current account balance/GDP (4.4) (5.0) (2.6) (1.3) (1.6) (1.4) (1.7) (1.8) (1.7)
Gross external financing needs/CAR&FXR 69.8 72.7 76.9 80.3 74.6 73.9 73.5 74.3 75.0
Narrow net external debt/CAR 5.7 20.9 21.9 16.7 19.7 19.3 19.1 18.8 18.5
GG balance/GDP (0.3) (2.2) (2.4) (2.9) (2.1) (2) (1.9) (2) (1.9)
GG net debt/GDP 3.9 6.4 8.1 9.8 12.1 13.6 14.8 16.1 17.1
CPI inflation 3.3 3.6 3.6 2.8 1.3 2.2 2.2 2.1 2.0
Bank credit to resident private sector/GDP 41.2 43.9 42.8 42.4 44.0 45.3 47.0 48.7 50.3
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Suriname (B/Stable/B)

  • Analyst: stephen.ogilvie@spglobal.com
  • Latest publication: Republic of Suriname Ratings Affirmed At 'B'; Outlook Is Stable, April 18, 2019
Rating score snapshot
  • Institutional assessment: 5
  • Economic assessment: 6
  • External assessment: 2
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 6
  • Monetary assessment: 5
Outlook: Stable

The stable outlook reflects our expectations that, in the next 12 months, real GDP growth will remain positive, with resource-led export growth leading to sustained current account surpluses and moderate growth in central bank reserves. We also assume the government will delay implementing the value-added tax (VAT) until after the 2020 election, deferring previously expected improvement in fiscal results. The election increases uncertainty in our fiscal forecast, as spending could increase significantly in the run-up. We also expect that the exchange rate will remain stable, inflation will continue to inch down, and pressure on the domestic banking system will ease. The announcement of additional steps to boost investor confidence and GDP growth, in conjunction with continued production from Suriname's gold mines, could further accelerate the government's movement toward long-term fiscal sustainability.

A clear track record of continuing economic growth at rates typical of countries with similar levels of development and fiscal consolidation that results in improved fiscal balances and lower debt and interest burdens on a sustainable basis could lead to an upgrade in the next 12-24 months.

Alternatively, a weaker external liquidity position could put greater strain on the exchange rate, boost inflation expectations, undermine domestic confidence, and stress the domestic financial system. We could downgrade Suriname as a result.

(Originally published on April 18, 2019)

Table 28

Suriname
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 9.4 8.4 5.4 5.5 5.9 6.6 7.1 7.5 8.0
GDP growth 0.3 (3.4) (5.6) 1.8 2.6 2.3 2.5 2.5 2.6
GDP per capita growth (1.3) (4.9) (7.0) 0.4 1.3 1.0 1.2 1.2 1.3
Current account balance/GDP (8.0) (16.4) (5.1) 1.9 (3.4) (1.0) (0.9) 0.7 1.1
Gross external financing needs/CAR&FXR 99.3 121.6 117.1 97.0 107.1 98.3 96.4 93.4 89.5
Narrow net external debt/CAR 13.4 52.9 72.3 57.8 57.6 56.1 54.0 51.5 49.2
GG balance/GDP (5.9) (9.8) (11.3) (9.3) (11.5) (6.3) (5.8) (4.0) (3.2)
GG net debt/GDP 29.3 47.8 63.9 71.5 66.5 64.1 64.8 63.1 61.0
CPI inflation 3.4 6.9 55.5 22.0 6.8 6.5 6.2 5.9 5.6
Bank credit to resident private sector/GDP 31.3 38.5 41.8 34.1 31.6 29.8 29.8 29.8 29.8
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Trinidad and Tobago (BBB/Stable/A-2)

  • Analyst: julia.smith@spglobal.com
  • Latest publication: Trinidad and Tobago Sovereign Rating Lowered To 'BBB' From 'BBB+' On Economic And Fiscal Stress; Outlook is Stable, July 9, 2019
Rating score snapshot
  • Institutional assessment: 3
  • Economic assessment: 4
  • External assessment: 3
  • Fiscal assessment, budget performance: 2
  • Fiscal assessment, debt: 3
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects our view that Trinidad and Tobago's considerable liquid financial assets will continue to support a strong external asset position and limit the impact of fiscal deficits on the government's net debt burden over the next two years. The outlook also incorporates our expectation of a subdued gas sector with a slow recovery in oil production, which will support a gradual acceleration in economic growth. Although we expect the government's deficit to shrink this fiscal year due to higher revenues from the energy sector and some one-off sources, we expect the fiscal deficit will increase over the next two years as revenue growth fails to match that of spending.

Economic growth not materializing to the degree that we expect over the next two years could lead to lower per capita income levels and, in turn, a weaker tax base for the sovereign. Poor economic performance could, absent corrective fiscal measures, contribute to persistently larger increases in net general government debt, or help boost interest payments above 10% of general government revenues. We could lower the ratings as a result.

A strong track record of growth in the energy sector--due to higher-than-expected energy prices or production--could lead to significantly above-average economic growth over the forecast horizon. Better GDP growth, combined with a reduced net general government debt burden, and stemming the balance of payments outflows that have contributed to lower foreign exchange reserves, could lead to an upgrade over the next two years.

(Originally published on July 9, 2019)

Table 29

Trinidad and Tobago
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 20.5 18.6 16.5 16.6 17.5 17.7 18.4 18.9 19.7
GDP growth (0.7) 1.8 (6.3) (2.3) (0.3) 0.4 2.0 2.0 2.0
GDP per capita growth (1.1) 1.5 (6.6) (2.5) (0.4) 0.1 1.7 1.7 1.7
Current account balance/GDP 14.5 7.0 (4.4) 5.5 5.0 5.2 4.4 3.7 3.8
Gross external financing needs/CAR&FXR 55.0 54.6 64.4 57.5 61.3 68.3 70.6 72.8 75.9
Narrow net external debt/CAR (68.3) (80.8) (89.3) (67.8) (57.2) (47.1) (45.1) (41.1) (36.5)
GG balance/GDP (2.5) (1.7) (5.4) (8.9) (3.5) (2.4) (4.4) (5.0) (4.2)
GG net debt/GDP 19.6 37.5 31.8 31.2 26.9 27.5 29.4 32.1 33.5
CPI inflation 5.7 4.7 3.1 1.9 1.0 1.3 1.8 1.4 2.1
Bank credit to resident private sector/GDP 36.4 43.3 47.0 47.3 46.8 47.4 47.1 46.8 46.6
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Turks and Caicos Islands (BBB+/Stable/A-2)

  • Analyst: julia.smith@spglobal.com
  • Latest publication: Turks and Caicos Islands, March 15, 2019
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 4
  • External assessment: 4
  • Fiscal assessment, budget performance: 1
  • Fiscal assessment, debt: 1
  • Monetary assessment: 6
Outlook: Stable

The stable outlook balances our forecast of a continued economic rebound in TCI with our expectation that it will be difficult to fully offset the economy's inherent structural vulnerabilities in the next two years.

We could lower our ratings on the territory over the next two years should the government's financing needs rise significantly, due to, for instance, the execution of large investment projects, leading to an increase in net general government debt that we expected to persist over the outlook horizon.

We could raise our ratings in the next two years should new GDP or external data reveal significantly stronger economic or external positions and materially improved data quality.

(Originally published on March 15, 2019)

Table 30

Turks and Caicos
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 23.4 24.4 25.1 24.2 24.7 25.7 26.6 27.6 28.5
GDP growth 6.7 5.9 4.4 4.3 5.3 3.2 2.5 2.5 2.5
GDP per capita growth 2.2 1.6 1.0 (0.7) 1.3 2.2 1.5 1.5 1.5
Current account balance/GDP 12.5 15.6 18.0 4.0 (9.0) (2.9) (3.9) (6.0) (8.1)
Gross external financing needs/CAR&FXR N/A 180.8 145.7 159.3 166.2 165.8 162.1 166.5 171.3
Narrow net external debt/CAR 150.0 86.2 24.7 (44.4) (85.2) (30.5) (28.6) (25.6) (22.8)
GG balance/GDP 10.1 8.1 6.0 8.2 8.6 5.1 6.0 5.0 5.5
GG net debt/GDP (11.6) (20.3) (25.6) (35.7) (39.7) (40.8) (41.8) (42.4) (43.5)
CPI inflation 2.3 2.2 2.0 2.1 2.1 2.0 2.0 2.0 2.0
Bank credit to resident private sector/GDP 117.7 103.6 92.7 90.8 85.0 82.4 80.4 78.4 76.5
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

U.S. (AA+/Stable/A-1)

  • Analyst: joydeep.mukherji@spglobal.com
  • Latest publication: U.S. 'AA+/A-1+' Ratings Affirmed; Outlook Remains Stable, June 27, 2019
Rating score snapshot
  • Institutional assessment: 2
  • Economic assessment: 1
  • External assessment: 3
  • Fiscal assessment, budget performance: 4
  • Fiscal assessment, debt: 5
  • Monetary assessment: 1
Outlook: Stable

The stable outlook reflects our view that the U.S.'s negative and positive rating factors will be balanced over the next two years. Persistent political divisions will, in our view, continue to weigh on the government's ability to address public finance pressures in a more timely manner. We expect that political debates over funding the government and raising its debt ceiling will continue to be resolved at the last minute, as they have been in recent years. We also expect the U.S.'s institutional checks and balances, strong rule of law, and free flow of information to contribute to stability and predictability in economic policies. The U.S. dollar's status as the world's premier reserve currency, and the size and depth of the U.S. financial market, should continue to sustain policy flexibility. We also expect that, despite large projected fiscal deficits in the near term, the government will enact countervailing measures to begin addressing longer-term fiscal challenges of the U.S. over time. A failure to do so could lead to a negative rating action.

On the other hand, we could raise the rating if we see signs of more effective and proactive public policymaking, which could reflect greater bipartisan coordination between the executive branch and Congress than has been the norm in recent years.

(Originally published on June 27, 2019)

Table 31

U.S.
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 55.0 56.8 57.8 59.8 62.8 64.9 66.8 68.9 71.0
GDP growth 2.5 3.0 1.6 2.4 2.9 2.3 1.9 1.8 1.8
GDP per capita growth 1.7 2.2 0.9 1.6 2.3 1.5 1.2 1.1 1.1
Current account balance/GDP (2.1) (2.2) (2.3) (2.3) (2.4) (1.4) (1.1) (1.5) (1.8)
Gross external financing needs/CAR&FXR 345.7 371.3 357.7 340.0 318.3 305.8 302.7 305.3 308.6
Narrow net external debt/CAR 308.5 329.2 339.1 334.3 316.2 315.3 312.2 309.4 311.8
GG balance/GDP (4.4) (4) (4.8) (3.7) (6.0) (4.9) (4.7) (4.7) (4.6)
GG net debt/GDP 78.6 78.6 80.2 80.7 81.3 82.7 84.1 85.5 86.6
CPI inflation 1.6 0.1 1.3 2.1 2.4 1.7 1.9 2.0 2.0
Bank credit to resident private sector/GDP 148.1 147.9 150.1 151.7 150.0 150.9 151.7 152.5 153.1
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Uruguay (BBB/Stable/A-2)

  • Analyst: constanza.perez.aquino@spglobal.com
  • Latest publication: Uruguay 'BBB/A-2' Ratings Affirmed; Outlook Remains Stable, May 7, 2019
Rating score snapshot
  • Institutional assessment: 3
  • Economic assessment: 3
  • External assessment: 2
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt: 4
  • Monetary assessment: 5
Outlook: Stable

The stable outlook reflects our view of continuity in key economic policies after national elections later this year. We expect that, over the next two years, Uruguay will continue to show high general government (GG) fiscal deficits and an increase in its net GG debt burden. At the same time, we expect that Uruguay will sustain GDP growth, with per capita GDP likely expanding by 1.8% per year during 2019-2021.

A sustained decline in inflation, along with further deepening of local capital markets, could facilitate the government's ongoing efforts to increase the share of local currency in its debt stock. A falling exposure to foreign-currency-denominated debt could reduce the hit of exchange-rate fluctuations on the sovereign's balance sheet and improve the conduct of monetary policy, potentially leading to a higher rating over the next two years. We could also raise the ratings if a combination of good GDP growth and greater-than-expected fiscal consolidation measures contain fiscal slippage and decrease the debt burden.

We could lower the ratings on Uruguay over the next two years if failure to advance on important investment projects and on policies to reverse the current decline in investments undermine the government's revenue generation base. In this scenario, the already high GG deficit and the net GG debt burden could continue to rise beyond our expectations.

(Originally published on May 7, 2019)

Table 32

Uruguay
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 16.8 15.5 15.3 17.2 17.3 16.2 16.1 17.0 18.2
GDP growth 3.2 0.4 1.7 2.6 1.6 0.5 1.5 2.3 2.8
GDP per capita growth 2.9 (0.4) 1.3 2.2 1.9 0.1 1.1 2.0 2.5
Current account balance/GDP (3.2) (0.9) 0.6 0.8 (0.6) (0.7) (1.0) (1.3) (1.5)
Gross external financing needs/CAR&FXR 97.5 95.2 100.7 98.7 89.7 89.9 90.5 90.1 88.7
Narrow net external debt/CAR 37.0 40.8 37.4 26.8 31.1 31.6 25.0 19.7 17.3
GG balance/GDP (2.9) (3.5) (2.4) (3.5) (2.7) (2.5) (2.6) (2.5) (2.8)
GG net debt/GDP 50.3 52.0 50.9 55.9 58.6 62.3 62.5 61.9 61.9
CPI inflation 8.9 8.7 9.6 6.2 7.6 7.9 7.6 7.3 7.0
Bank credit to resident private sector/GDP 27.9 31.2 28.9 27.0 28.1 28.0 27.7 27.3 26.8
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

Venezuela (SD/--/D)

  • Analyst: manuel.orozco@spglobal.com
  • Latest publication: Venezuela, April 5, 2019
Rating score snapshot
  • Institutional assessment: 6
  • Economic assessment: 6
  • External assessment: 6
  • Fiscal assessment, budget performance: 6
  • Fiscal assessment, debt: 6
  • Monetary assessment: 6
Outlook: Negative

Our negative outlook reflects our opinion that there is a one-in-three chance that Venezuela could default within the next six months on its local currency debt obligations.

If the sovereign cures its default on the overdue foreign currency coupon payments or the announced restructuring debt operation moves forward and is completed, we would raise our long-term foreign currency sovereign issuer credit and issue ratings from 'SD' and 'D', respectively, to the 'CCC' category or 'B-'.

(Originally published on April 5, 2019)

Table 33

Venezuela
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 16.1 42.5 101.7 685.0 0.1 0.0 0.0 0.0 0.0
GDP growth (3.9) (6.2) (17.1) (15.7) (19.6) (20) (5.0) 0.0 3.5
GDP per capita growth (4.7) (6.3) (16.4) (14.4) (18.2) (19.0) (4.7) (0.9) 1.5
Current account balance/GDP 1.0 (1.3) (0.1) 0.0 221.0 274.6 225.6 270.2 132.4
Gross external financing needs/CAR&FXR 116.5 158.9 187.2 169.8 168.7 248.1 222.6 255.1 294.0
Narrow net external debt/CAR 88.9 217.2 316.6 239.1 239.1 438.4 556.3 658.2 878.0
GG balance/GDP (15.6) (10.7) (10.8) (16.6) (30.6) (29.8) (30.1) (30.0) (29.6)
GG net debt/GDP 21.2 9.0 2.7 17.3 12,844.4 16,047.8 16,890.7 16,889.0 16,321.8
CPI inflation 68.5 180.9 274.4 862.6 14,223.8 8,159.4 2,589.8 634.2 249.4
Bank credit to resident private sector/GDP 44.0 34.6 21.0 17.1 17.1 17.1 17.1 17.1 17.1
e--Estimate. f--Forecast. A free and interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri.

This report does not constitute a rating action.

Primary Credit Analyst:Joydeep Mukherji, New York (1) 212-438-7351;
joydeep.mukherji@spglobal.com

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