Moody's: El Salvador debt manageable

Moody's Investors Service said in its annual report on El Salvador that the government's Baa3 bond ratings and stable outlook reflect the presence of a manageable debt burden with stable-to-improving debt ratios and a very favorable debt amortization profile as the government typically places long-dated, 20-year bonds.

"The ratings incorporate recurring fiscal costs of a pension reform that involved a shift from a public 'pay-as-you-go' system to one that is fully-funded but private," said Moody's vice president Mauro Leos, author of the report.

"At present, the pension-related component of the deficit accounts for the bulk of the government's financing needs"

He said the authorities' strong commitment to full dollarization since 2002 has strengthened a monetary regime that is also supported by conservative macroeconomic policies.

Accordingly, said Leos, "adoption of the US dollar as El Salvador's official currency is viewed by Moody's as credible and sustainable."

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