Arguing a moderate fiscal deficit, low level of public debt and an improvement in the country's external position, Standard & Poor´s kept the country's credit risk rating at BB-.
From the press release of the Banco de Guatemala:
October 31, 2018. The risk rating agency Standard & Poor’s (S&P) confirmed the rating of credit risk for Guatemala in BB- and maintained the stable outlook on Monday, October 29th.
The promotion to "BB" rating with a stable outlook is based on better GDP growth and tax revenues.
From the press release:
Summary
We expect that the government of Guatemala will reduce fiscal deficits averaging 2.5% of GDP over the next three years, compared with previous estimates of over 3% of GDP.
The new tax legislation in Guatemala will provide an opportunity to increase gradually its still low tax revenues through better tax administration.
While in Europe ratings go down and in Latin American they go up, the opinion of the agencies is starting to be looked at with different eyes.
A decade ago debt issued by European countries benefited from mostly high grades and attractive ratings, which helped them maintain high prices and low yields.
This situation now appears to have reversed, and today it is the Latin American countries that rating agencies look upon favorably, while countries such as Portugal and Greece are seeing debt ratings fall to speculative levels.
S&P revised its outlook from positive to stable, but it maintained its country risk rating for foreign currency at BB/B.
"The revision from positive to stable reflects the slowdown of record growth, both for tax collection as well as for the growth of the GDP during the last two years," explained Roberto Sifon Arevalo, S&P analyst.
The profits of banks in the region will be affected by the global economic crisis, according to a report published last Wednesday by American rating agency, Standard & Poors.
The firm says that most of the banks in Central America and the Caribbean have had a stable performance, despite increased inflation, scarcity of liquidity in the international markets and restrictive monetary policies by Central Banks.