Effects of the Negative Risk Outlook

Guatemalan businessmen assure that the change from Stable to Negative made by Fitch Ratings in the country's risk perspective should be taken seriously, since investments could stagnate.

Monday, April 15, 2019

On April 11, Fitch announced that it maintained its "BB" rating for long-term foreign currency debt default, but decided to modify the outlook because the country reflects political tension and greater uncertainty in agents, as well as a constant erosion in the government's low tax collection.

See "Negative Risk Outlook for Guatemala"

Christian Nolck Rodriguez, president of the Guatemalan Association of Insurance Institutions (Agis), explained to Prensalibre.com that "... the change of that perspective must be taken very seriously and attend the points of view offered by the agency, which, although it is not the only point of view, if it is relevant and important for economic development. This situation could lead to stagnation, which at some point was observed to be more dynamic in the economy and especially in investment.

Alejandro Ceballos, president of the Apparel and Textile Commission (Vestex), stated that "... the scope of the effects of the note will not impact foreign trade (imports and exports), but rather the possible investments in the present and next fiscal year. Guatemala is looking for investments in the apparel and textile sector, but this kind of notes can "alter" the capitalists.

The presidential and congressional elections scheduled for this year may result in a government with a weak mandate, and are likely to lead to a fractured congress, represented by many political parties, resulting in continued political stagnation and diminished prospects for reform, was another argument Fitch put forward in its report.

More on this topic

Foreign Direct Investment is Stagnating

December 2018

During 2018, Guatemala received $1.175 million in FDI, barely 0.5% more than the investment reported in 2017, mainly because of the political and legal uncertainty that ruled the country.

Figures from the Banco de Guatemala (Banguat) report that in the last five years, the country has gained $6,139 million in foreign direct investment (FDI), being 2014 the one that registered the highest year-on-year increase when reporting a 7% rate regarding 2013.

Guatemala's Sovereign Risk Rating Revised

July 2013

"Weak public institutions in Guatemala and a polarized political environment continue to limit its credit quality" - Standard & Poor's

An article in elperiodico.com.gt reports that "The three most important credit rating agencies internationally: Moody's, Standard & Poors and Fitch Ratings, have pointed to deficient management in Guatemala's social indicators."

Negative Outlook for Salvadoran Debt Rating

January 2013

Standard & Poor's placed has set El Salvador’s risk rating as ‘negative outlook’, indicating deterioration in the investment climate and growth of the fiscal deficit.

Last Friday Standard & Poor's Ratings (S & P) cut its forecast for El Salvador, arguing that the climate of increasing political polarization is weighing on investment and economic growth.

Fitch changes outlook for El Salvador to negative

October 2008

Fitch Ratings has revised the Rating Outlook on El Salvador's long-term foreign and local currency Issuer Default Ratings (IDRs) to Negative from Stable.

The ratings are as follows:
Long-term foreign currency IDR at 'BB+'; Long-term local currency IDR at 'BB+'; Short-term foreign currency at 'B'; Country ceiling at 'BBB-'.

 close (x)

Receive more news about Economics

Suscribe FOR FREE to CentralAmericaDATA EXPRESS.
The most important news of Central America, every day.

Type in your e-mail address:

* Al suscribirse, estará aceptando los terminos y condiciones


PRONicaragua

PRONicaragua, is the Nicaraguan Investment Promotion Agency, established in 2002. We are a non-profit, public-private institution whose mission is to generate economic growth and job creation in Nicaragua by attracting high-quality foreign direct investment. The Agency provides complimentary support services to qualified investors seeking investment opportunities in our country.
Operates in Nicaragua
Phone: (505) 2270 6400

Company Profile

Stock Indexes

(Apr 6)
Dow Jones
-5.60%
S&P 500
-5.10%
Nasdaq
-5.64%

Commodities

(May 20)
Brent Crude Oil
71.3
Coffee "C"
89.350
Gold
1,277
Silver
14.411