Firm S&P Global Ratings upgrades Guatemala’s credit rating

Inspenet, April 15, 2023

The Government of the Republic of Guatemala , under the leadership of President Alejandro Giammattei, and in keeping with its role as guarantor of the country’s economic and financial stability, welcomes and is satisfied with the rating that the international risk firm S&P Global Ratings granted to the country.

Said credit risk rating for Guatemala from BB- (with a positive outlook) to BB (with a stable outlook) was published in the S&P report this week.

The decision was based mainly on the resilience and macroeconomic stability of the Guatemalan economy. The rating firm took into account relevant aspects of the country’s economy that constitute credit strengths, such as the solid external position, the moderation of the public debt with respect to the Gross Domestic Product (GDP) and a prudently managed monetary policy.

The ‘stable’ outlook granted by S&P reflects the expectation that cautious macroeconomic management will continue to prevail in the short and medium term. This despite the unfavorable external conditions and the general elections scheduled for June 25 of this year.

Among the highly positive aspects, the agency points out that tax collection has strengthened over the last two years, increasing the tax burden (with respect to GDP) from 10.7% in 2019 to 12.1% in 2022. Said increase is due, fundamentally, to improvements observed in the tax administration.

The risk rating agency also mentions that Guatemala’s monetary policy continues to reflect the mandate of the Central Bank focused on inflation control, as well as its operational independence.

The foregoing has materialized in a 300 basis point increase in the monetary policy interest rate, since May 2022, and allows us to expect the year-on-year inflation rate to converge to the central point of the target at the end of 2024.

It should be noted in the report that the country’s credit rating could improve in the short or medium term if the political environment and the implementation of favorable economic policies raise investor confidence.

The central government is aware that this possible rating change will be achieved by inducing higher-than-expected economic growth, coupled with gradual progress in strengthening the country’s regulatory and legal framework, to reduce uncertainty and strengthen the rule of law.

In this regard, it guarantees that the efforts in economic, financial, fiscal and investment matters continue, in favor of the progress of the country.

Inspenet, April 15, 2023

Source : Social Communication Secretariat of the Presidency -SCSPR-

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