MercoPress. South Atlantic News Agency
Fitch upgrades Uruguay’s debt to BB, just below investment grade
Uruguay outperformed its peers Citing the “increased resilience to external shocks” Fitch upgraded Uruguay to BB from BB-, two levels below investment-grade and in line with Standard & Poor's. Moody's Investors Service rates Uruguay at Ba3, three levels below investment grade. Fitch last increased the country's rating in July 2007, taking it up one level from B+.
“A strengthened macroeconomic policy framework, greater exchange rate flexibility, and a historically high level of international reserves” have increased Uruguay's resilience to external shocks, Fitch said in a statement. “A sustained reduction in the government's debt burden, improvements in government debt composition, as well as further strengthening of Uruguay's external solvency and liquidity indicators would be positive for creditworthiness,” Fitch said.
Uruguay's government raised its forecast for this year's primary budget surplus to 500 million USD from 350 million, the country's Debt Management Unit said in an e-mailed report on July 23. The forecast for the 2011 surplus before interest payments was raised to 600 million from 450 million, the agency said.
In 2009, Uruguay's 2.9% economic growth outperformed that of Latin America and peers. Low government revenue volatility and economic resilience resulted in a comparatively smaller fiscal deterioration. This year the economy is forecasted to expand 5.5%.
Still, the country’s general government debt burden, estimated to reach nearly 49% of gross domestic product this year, remains above that of the BB rating category. In addition, a bulk of the sovereign's debt is denominated in foreign currency, exposing debt dynamics to currency risk.
On the other hand, Uruguay's low external financing needs, the prospects of continued foreign direct investment inflows and increased confidence in the financial system partly mitigate those risks.
Uruguay last month reported its first-quarter GDP jumped 8.9% on sharp growth in electricity output, as well as in trade, entertainment, transport and communications.
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Read all commentsNot bad for an “old jailbird freedom fighter” and a “communist” government.
Jul 28th, 2010 - 05:36 am 0Good luck with Cristina today.
Vamos Pepe todavia!
The Uruguayan government statistics are “fixed”, on the economy and else, they’re ambiguous, deceiving. Real Estate business is the major source of capital coming to Uruguay. Land and homes are selling like hot cakes to foreign investors. Prices are relatively low compared to other countries but industrial investment is almost non existent. Uruguay still is a cattle country. Good paying jobs are few and the minimum wage of U$ 400 a month, minus taxes is very low considering the high cost of living. Food is expensive like the US or the UE, electricity outrageous, gas at U$ 1.5 a liter or U$ 6 a gallon.
Jul 28th, 2010 - 01:00 pm 0The clear evidence of very poor economy growth is the constant emigration. The only deterrent is the strict immigration policies of other counties. Uruguayan population is one of the oldest in the world, with minus growth, with a constant of 3.4 million people over several decades.
“A sustained reduction in the government's debt burden”…This statement is a lie, for a fact the national debt has double in the last 5 years. Sorry Fitch you’ve been duped. The government is a step away from default, like Greece among others.
If Uruguay wasn't having her legitimate trade bled by neo-imperialist colonialist Argentina............
Jul 28th, 2010 - 04:15 pm 0Commenting for this story is now closed.
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