Fitch affirms Taiwan

Fitch Ratings said it affirmed Taiwan's long-term foreign- and local-currency issuer default ratings at A+ and AA, respectively, and the short-term foreign-currency issuer default rating at F1 and the country ceiling at AA.

The outlook remains stable.

The ratings are supported by Taiwan's strong external financial position, but Fitch said there is a need for improvement in public debt ratios if the ratings are to be maintained. Government debt is already high compared with the rating peer group, and any further increase would likely prompt a review, particularly of the local-currency issuer default rating, the agency added.

Fitch said it is monitoring the political uncertainty surrounding the leadership, and the country's structural fiscal deficit and high general government debt relative to GDP also are concerns.

Successive corruption scandals and allegations have resulted in president Chen Shui-Bian coming under increasing pressure to resign. The weakened position of the president can detract from other priorities, including cross-Strait issues, economic reforms and public finances, the agency said.

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