El Salvador's 'CCC' Long-Term ratings reflect Fitch's assessment that political polarization complicating the sovereign's ability to meet its financing gap for 2017-2018, continues, highlighting the risk for default.
From a statement issued by Fitch Ratings:
Fitch Ratings-New York-28 July 2017: Fitch Ratings has affirmed El Salvador's Long-Term Foreign and Local Currency IDRs at 'CCC'.
Despite latent risks in the fiscal area, the Central Bank estimates growth of 2.4% for GDP, helped by an increase in consumption and low inflation.
Authorities at the Central Reserve Bank of El Salvador warned that the growth forecast could be affected by possible increases in interest rates or in international oil prices.Political polarization and the delicate fiscal situation also constitute threats to the expected growth.
"In the second quarter of 2015 slow economic growth remain and public finances continue to deteriorate, increasing the risk of fiscal unsustainability".
From a report by the Salvadoran Foundation for Development (Fusades) "Economic Situation in Q2 2015":
In the second quarter of 2015, economic growth remains low despite the external positive effect of falling oil prices.
"The ongoing economic recovery in the United States and persistence of relatively low oil prices will provide favorable tailwinds to the region.Because of supply constraints, the region is expected to maintain a moderate pace of growth in coming years."
From the press release by IMF:
Central bank governors, finance ministers, and banking superintendents of Central America, Panama, and the Dominican Republic, and senior IMF officials met in El Salvador on July 23-24 to review the economic outlook for the region and strategies to strengthen policy frameworks and raise inclusive growth. The regional conference saw the participation of the President of El Salvador, Salvador Sánchez-Cerén; Governor of the Bank of México, Agustín Carstens; Director of the Netherlands Bureau of Economic Policy Analysis, Laura van Geest; and former Finance Minister of Perú, Luis Carranza.