Fitch cuts Cape Verde view to stable

Fitch Ratings said it changed Cape Verde's outlook to stable from positive. Its long-term foreign-currency issuer default rating have been affirmed at B+, local-currency issuer default rating at BB-, country ceiling at BB-, and short-term foreign-currency issuer default rating at B.

Cape Verde's emerging tourist industry has been hit by the global recession, Fitch said. An ambitious public investment program will keep the economy growing - and should increase long-run growth potential - but will cause public debt to rise and add to pressure on external finances, the agency said.

Government debt remains high relative to most other B-rated sovereigns although many of these, unlike Cape Verde, have benefited from bilateral and multilateral debt reduction, Fitch said. Cape Verde will eventually face higher costs on new borrowing following its graduation to middle income country status in 2008, the agency added.

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