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Dagong gives BBB+ sovereign credit rating to Colombia

Updated: 2012-04-01 10:33


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BEIJING - Dagong Global Credit Rating Co Ltd, China's leading credit rating agency, on Saturday gave the Republic of Colombia a rating of BBB+ with a stable outlook for its local and foreign currency sovereign credit.

In its first sovereign credit report on Colombia, the agency said the country's local and foreign currency solvency is moderate, given the stable political environment, sustained economic growth, alleviated fiscal deficit and debt burden in the south American nation.

However, persistent economic structural problems, potential fiscal pressure, financial risk and foreign exchange risk are still restraining improvement for the Colombian government's solvency, the agency added.

In the short-term, a decline in external demand and insufficient investment will slow Colombia's economic growth slightly to 4.5 percent in 2012, although growth will accelerate again in 2013 thanks to robust domestic demand, low inflation and the recovery of the global economy, the agency said.

Due to pressure from a fiscal deficit and economic slowdown in the short-term, Dagong predicted that the Colombian central government's debt-to-current-fiscal-revenue-ratio will be 37 percent in 2012 and 36.7 percent in 2013, but will ease slightly to 35.2 percent in the medium-term as a result of strict fiscal discipline and a debt curtailment plan.