Delay in Vaccination = Downgrading of Risk Ratings

For Fitch, the delay in vaccination campaigns constitutes a latent risk of a prolonged pandemic, which would delay the recovery of the region's economies and would cause negative pressures on the risk ratings to be issued in the coming months.

Wednesday, May 26, 2021

Fitch Ratings issued a bulletin for Mexico, Central America and the Caribbean on May 25, in which it warned that given the deep economic contractions in the region and the moderate recovery outlook, there are threats of negative rating pressures.

See "Covid Passport: Essential for Economic Recovery"

According to the rating agency, a substantial increase in unemployment in the region, combined with a tepid recovery in tourism, may delay the recovery of the overall economy. In addition, the slow progress of vaccination remains a latent risk of a prolonged pandemic, the analysis highlights.

The rating agency notes in its latest report that the vaccination campaign in Honduras, Nicaragua and Guatemala has lagged behind other cases.

Detail of the progress of the vaccination process against Covid-19 in Central America, with data as of May 25, 2021:

Country
Doses applied
% of population with at least one dose
El Salvador
1.74 millones
17.2%
Costa Rica
1.46 millones
17.2%
Panamá
954 mil
14.7%
Guatemala
363 mil
2.2%
Nicaragua
168 mil
2.5%
Honduras
164 mil
1.4%

The authorities agree with Fitch's analysis. Alvaro Gonzalez Ricci, Guatemala's Minister of Finance, told Prensalibre.com that "... 'we here effectively have to speed up vaccination, speed up the pressure to deliver the vaccines and start with a vaccination process, with which the infrastructure is already in place and what is missing is to speed up the dispatch of vaccines'."

Regarding tax collection and economic recovery in this context of health crisis, Fitch notes that "... tax collection in the region lags peer ratings, limiting governments' ability to provide fiscal relief, support economic recovery and, together with high interest payments, indicates relatively tight fiscal space."

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