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Fitch: External and Fiscal Accounts Support Colombia's Positive Rating Momentum
April 23, 2013 / 2:56 PM / 4 years ago

Fitch: External and Fiscal Accounts Support Colombia's Positive Rating Momentum

NEW YORK, April 23 (Fitch) Colombia's creditworthiness is on positive trajectory, according to a new Fitch Ratings report. In addition to maintaining a sound macroeconomic performance and stability, the sovereign has further strengthened its external and fiscal balance sheets. Based on these improvements, Fitch revised the Rating Outlook on the sovereign's long-term foreign currency Issuer Default Rating to Positive from Stable in March. 'External accounts have strengthened through international reserve accumulation, and improvements in fiscal policy are consistent with fiscal consolidation and a declining debt burden,' said Erich Arispe, Director in Fitch's Latin America Sovereign Group. Rising international reserve levels and the fact that Colombia will turn into a net sovereign external creditor this year further increase its resilience to external shocks. The government's debt burden continues to decline below the 'BBB' median. The smaller interest burden and increased capital spending reflect an improving trend in the composition of public spending, while the recently approved tax reform highlights the commitment of the government to improving the structure of the cumbersome tax code. Currency appreciation, increased commodity dependence, competitiveness issues and maintaining macroeconomic and financial stability represent challenges for Colombia. The credibility and flexibility of its monetary policy as well as progress in reducing the structural constraints on the economy could support the authorities' efforts to reduce risks to macroeconomic and financial stability and achieve higher growth. While there has been a positive trend in Colombia's fiscal and external accounts over the recent past, these still do not stand out as strengths relative to commodity exporters within the 'BBB' rating category. In addition, the country's still low revenue base restricts the pace of fiscal consolidation and limits the sovereign's fiscal flexibility. Other structural weaknesses, such as a low GDP per capita, weaker-than-investment-grade governance indicators and limited trade openness continue to represent challenges for the country. Fitch's special report 'Colombia Consolidates Its Investment Grade Status' is available at 'www.fitchratings.com'. Contact: Erich Arispe Director +1-212-908-9165 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Santiago Mosquera Director +1-212-908-0271 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable Criteria andALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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