MercoPress. South Atlantic News Agency

S&P raises Uruguay's credit rating one level to BB-

Uruguay's debt rating was raised one level by Standard & Poor's, citing the country's economic expansion and international debt reduction. S&P lifted Uruguay's foreign-debt rating to BB-, three levels below investment grade, from B+. The outlook on the rating is stable, S&P said in a statement.

Uruguay's gross domestic product rose 10.9% in the first quarter from a year ago, according to the country's Central bank. The country's 23.1 billion US dollars economy is heading toward its sixth year of expansion. Meanwhile, annual inflation rate quickened to 8.4% in June. Foreign-currency obligations make up 67% of the national debt, down from 94% in 2003, underlined S&P. Last year Uruguay saw the culmination of the country's largest investment ever in recent times, 1.1 billion US dollars in a pulp mill along the River Uruguay belonging to Finland's Botnia. "Over the last four years, Uruguay has achieved high economic growth levels with only moderate inflation within a context of balanced fiscal accounts and only minor current account deficits, significantly reducing both fiscal and external debt levels", said the S&P. However the S&P reports also indicates that the Uruguayan currency last year appreciated 19.4% against the US dollar. Besides Uruguay's economy suffers from low investment and a dependence on commodities that will limit further credit-rating increases.