Threats to Risk Rating

Institutional problems and lower levels of economic growth compared to other countries with the same risk rating, could cause in the future a degradation of Guatemala's debt rating.

Tuesday, July 23, 2019

Although in its last evaluation Moody's decided to keep Guatemala's credit rating at Ba1 with a stable outlook, arguing that the economy reports stable growth, and that a prudent management of monetary and fiscal policy has been made, there are some threats for the rating to degrade.

For Gabriel Torres, Moody's analyst, the rating could be downgraded if "... Some of these problems that I mentioned as the institutional part, the level of growth level a little lower than other countries with similar ratings continues, in time could lead to a downgrade."

You may be interested in "Negative Risk Outlook for Guatemala"

Although there are threats to the change of rating, there are factors contributing to keep the grade unchanged. Torres explained to Prensalibre that "... if debt went down and remained lower on a quasi-permanent basis, that could support. But right now, we don't see a change in rating."

For the risk qualifier, other arguments influencing the stable outlook are the low fiscal deficit because of strict controls on public spending and reduced public debt ratios, as well as a demonstrated economic resilience to extra-economic events.

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From a statement issued by the Bank of Guatemala:

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