UPDATE 1-S&P revises Curacao credit outlook up, cites health, pension reform

Fri Jun 14, 2013 5:20pm EDT

NEW YORK, June 14 (Reuters) - Rating agency Standard & Poor's on Friday revised Curacao's sovereign credit outlook up to stable from negative, citing the government's steps to improve its financial position such as reforms to health care and public pensions.

The rating is currently A-minus.

"The government raised health care and general pension premiums, as well as raised the retirement age to 65 from 60. As a result, we expect the deficit in the general pension system to gradually return to surpluses over the next decade," S&P said in a statement.

S&P said it expects the reforms will gradually improve the government's fiscal position and "the gross general government debt burden will gradually decline."

In addition, increases in luxury goods sales tax, property tax and measures to cut the government workforce gradually will help improve the fiscal position.

The firm expects these reforms to lead to a 2 percent contraction in the economy in 2013, but general government debt to stabilize at around 30 percent of gross domestic product.

Curacao is not rated by either Moody's Investors Service or Fitch Ratings.

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