S&P affirms Guatemala

Standard & Poor's said it affirmed BB- long-term foreign, BB long-term local and B short-term foreign and local currency sovereign credit ratings on the Republic of Guatemala.

The outlook on the long-term ratings remains stable.

S&P said the ratings on Guatemala are supported by a long track record of conservative fiscal policies; progress made by the current government in controlling corruption and improving the efficiency of the public administration; diminished gross external financing requirements, supported by a large flow of family remittances and a strong international reserves position; and improved economic prospects as a result of the Central America Free Trade Agreement.

The ratings are constrained, S&P said, by a highly polarized political environment; very limited fiscal flexibility due to the inability to increase tax revenue; and the persistence of external imbalances.

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