Fitch Downgrades Guatemala's Risk Note

Arguing that a lower economic growth and a higher fiscal deficit are expected due to the effects of the covid-19, the agency decided to modify from BB to BB- the country risk rating.

Friday, April 3, 2020

The situation of the tax burden in the country is another factor affecting Fitch's decision, which was communicated to the Banco de Guatemala through the preliminary bulletin that the agency sent to the authorities.

See "Post-Quarantine Consumption Patterns"

Sergio Recinos, president of the Bank of Guatemala, told that "... The rating we had with Fitch was BB positive and now it is down to BB negative; before we had a negative perspective and now a stable perspective. We are down a step and the two main arguments are the little fiscal flexibility and a low tax burden and on the other hand, derived from the effects of covid-19, they estimate a drop in economic growth."

Recinos added that Fitch "... is still not considering that this crisis is global and will impact everyone; but at this moment it is a preliminary statement, but further confirmation is awaited."

This deterioration in the note may affect future issues of Eurobonds or the acquisition of credit lines from abroad.

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