S&P affirms El Salvador

Standard & Poor's said it affirmed its BB+ long-term and B short-term sovereign credit ratings on the Republic of El Salvador.

The outlook on the long-term ratings remains stable.

The agency said the ratings are supported by a stable monetary environment created by the 2001 adoption of the dollar as the local currency and a fairly strong and well-regulated banking system.

However, S&P said the ratings are constrained by low levels of investment and savings, which produced sluggish levels of economic growth and negative per capita growth in 2003 and 2004 and a relatively low tax base and the increasing cost of pension reform, which continue to limit fiscal flexibility.

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