According to an article by C.Véliz and J. Gramajo in Sigloxxi.com, Mauricio Choussy, the director of Fitch Central America, notes that four weaknesses persist in the country: “Low tax revenue, weak social indicators, social instability, and high levels of delinquency.”

Guatemala’s sovereign risk rating still hasn’t been lowered due to its fiscal history and fulfillment of its international obligations to repay debt as well as its low level of debt.

In addition to increasing the cost of the money the government would have to borrow to continue running, a lowering of the sovereign risk rating would imply other consequences. Among them is a correlative decline in the ratings of the banks in the country, just as what happened to the main banks in El Salvador after that country’s rating fell.

Source: sigloxxi.com

More on this topic

Costa Rica: Ratings Agencies Insist on Fiscal Adjustment

April 2015

Fitch, Moody's and Standard & Poor's are once again warning of the need to generate more revenue and cut public spending in order to avoid "negative consequences for ratings."

On average agencies provide a period of 12-18 months for the fiscal deficit and public debt to stabilize, while clarifying that "...

Quarterly Country Risk Report: June 2010

July 2010

Central American countries still need to improve their economic performance to reach investment grade ratings.

On its Quarterly Country Risk report for June 2010, the Central American Monetary Council (SECMCA), notes that Moody’s Investor Service improved the foreign currency risk ratings for Guatemala and Nicaragua.

“Now More than Ever, Fiscal Discipline”

March 2010

In the wake of Panama’s upgrade to investment grade, experts are already calling to maintain the efforts that led to such achievement.

Fitch’s recent upgrade of Panama’s debt to BBB- is likely to be mirrored by other big rating companies, confirming Panama’s entrance into the club of investment-grade countries.

El Salvador's Debt Lowered to Junk

November 2009

Moody's cut the country's rating for foreign-currency government bonds to Ba1 with a negative outlook.

This downgrade lowers El Salvador sovereign debt to 'junk', down from Baa3, the lowest level of investment grade.

"Since last year, El Salvador has been subject to severe shocks that have exposed underlying vulnerabilities associated with its condition as a small open economy with a high dependence on the U.S.