Fitch slices El Salvador

Fitch Ratings said it lowered El Salvador's long-term foreign-currency issuer default rating to CCC from B-.

“The downgrade reflects heightened financing risks stemming from increased reliance on short-term debt, an $800 million eurobond repayment due in January 2023, a still-high fiscal deficit, limited scope for additional local market financing, uncertain access to additional multilateral funding and external market financing given high borrowing costs. Furthermore, debt to GDP is expected to rise to 86.9% in 2022 after modest improvement in 2021, increasing concerns around debt sustainability over the medium term,” Fitch said in a press release.

“In Fitch’s view, weakening of institutions and concentration of power in the presidency have increased policy unpredictability, and the adoption of bitcoin as legal tender has added uncertainty about the potential for an IMF program that would unlock financing for 2022-2023,” the agency added.

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