NEW YORK Oct 23 Fitch Ratings on Wednesday
upgraded Peru's credit rating one notch higher into
investment-grade territory, crediting the country's fiscal
balance sheets and its record of growth and economic stability.
Fitch raised Peru's long-term foreign issuer default ratings
to BBB-plus from BBB, citing "continued pragmatism" under
President Ollanta Humala's government and his "steady progress
"Peru's upgrade is underpinned by the strength of the
sovereign's external and fiscal balance sheets, continued growth
outperformance in relation to 'BBB' peers and a long track
record of macroeconomic and financial stability," the ratings
agency said in a statement.
The outlook is stable.
Fitch also upgraded the country ceiling to A-minus from
BBB-plus and the long-term local currency to A-minus from
Fitch's new rating for Peru, following an upgrade from
Standard & Poor's to BBB-plus in August, places the Andean
country above Mexico and Brazil and only below Chile in the
Moody's rates the country Baa2 with a positive outlook.
Peru, a top producer of copper, gold and silver, has over
the past decade enjoyed an average annual economic expansion of
6.5 percent as exports have soared on China's growth and
domestic demand surged with the rise of the middle class.
Humala, a former military officer and one-time radical
elected two years ago on promises to make sure the poor benefit
from the country's growth, has pleased investors by extending
the free-market economic policies embraced by consecutive
Peruvian presidents since the 1990s.
Last year the economy expanded by 6.3 percent, one of the
fastest rates of growth in the region.
This year, however, the central bank expects GDP to expand
by about 5.5 percent as softer demand from major buyers like
China and weaker mineral prices have dampened the pace of growth
and set the stage for Peru's first trade deficit in more than a
Peru's potential growth rate, the pace at which the economy
can expand without stoking high inflation, is usually seen
between 6 percent and 6.5 percent.
"Despite the slowdown ... in 2013, Peru's economic growth
performance will be one of the strongest" among peers through
2015, Fitch said. "The general government is on track to record
its third consecutive fiscal surplus (0.4 percent of GDP) in
The Humala administration has vowed to keep cutting red tape
to boost mining output while also carrying out controversial
structural reforms to education and the civil service.
Finance Minister Luis Miguel Castilla has also tweaked
fiscal rules to help the Andean country handle unexpected
revenue swings related to its dependence on mineral exports.
Fitch said its upgrade assumes Peru will double its copper
production by 2016 as expected, China's economy will grow by an
average 7.2 percent through 2015 and that commodities will avoid
a slide into a lower price range.