NewsWhore
08-17-2006, 03:30 PM
Standard & Poor's Rating Services affirms its 'B' long- and short-term sovereign credit ratings on the Dominican Republic. The firm says that the outlook on the long-term ratings has been revised to positive from stable.
According to Standard & Poor's credit analyst Richard Francis, the positive outlook on the Dominican Republic's ratings reflects improved fiscal and external indicators, the result of the fiscal adjustment now underway and a sharp rise in international reserves and current account receipts (CAR) over the past year.
According to Standard & Poor, the Dominican Republic's general government deficit is expected to decline to 2.6% in 2006 from 3.3% in 2005 and over 7% in both 2003 and 2004. Due to the fiscal adjustment and the strengthening of the Dominican peso, general government debt to GDP is expected to fall to 39% in 2006, far below the 'B' median's 48%. Net external debt to CAR will fall to 28% in 2006 from 48% in 2003, and gross international reserves are expected to rise to over US$2 billion in 2006 from just US$800 million in 2004.
"There have been marked improvements in the country's external indicators, propelled by a pick-up in CAR, foreign direct investment, and a reversal of capital outflows," Francis said.
"Despite the improvements, the ratings on the Dominican Republic are constrained by poor governance and weak government institutions. Passage and implementation of important institutional reform that improve the government's policy framework and institutional capacity would be key to a ratings upgrade," he added. Francis explained that a number of bills would be debated in Congress this year. If passed, they could be implemented during 2007.
"The positive outlook balances improved economic prospects and moderate government debt levels with weak institutions and the large quasi-fiscal deficits of the Central Bank that constrain monetary policy," noted Francis. "Further improvements in governance, along with sustained economic growth and further fiscal measures to contain fiscal deficits, could lead to improved creditworthiness. On the other hand, further political problems or policy reversals could lead to negative rating actions," he concluded.
More... (http://www.dr1.com/index.html#9)
According to Standard & Poor's credit analyst Richard Francis, the positive outlook on the Dominican Republic's ratings reflects improved fiscal and external indicators, the result of the fiscal adjustment now underway and a sharp rise in international reserves and current account receipts (CAR) over the past year.
According to Standard & Poor, the Dominican Republic's general government deficit is expected to decline to 2.6% in 2006 from 3.3% in 2005 and over 7% in both 2003 and 2004. Due to the fiscal adjustment and the strengthening of the Dominican peso, general government debt to GDP is expected to fall to 39% in 2006, far below the 'B' median's 48%. Net external debt to CAR will fall to 28% in 2006 from 48% in 2003, and gross international reserves are expected to rise to over US$2 billion in 2006 from just US$800 million in 2004.
"There have been marked improvements in the country's external indicators, propelled by a pick-up in CAR, foreign direct investment, and a reversal of capital outflows," Francis said.
"Despite the improvements, the ratings on the Dominican Republic are constrained by poor governance and weak government institutions. Passage and implementation of important institutional reform that improve the government's policy framework and institutional capacity would be key to a ratings upgrade," he added. Francis explained that a number of bills would be debated in Congress this year. If passed, they could be implemented during 2007.
"The positive outlook balances improved economic prospects and moderate government debt levels with weak institutions and the large quasi-fiscal deficits of the Central Bank that constrain monetary policy," noted Francis. "Further improvements in governance, along with sustained economic growth and further fiscal measures to contain fiscal deficits, could lead to improved creditworthiness. On the other hand, further political problems or policy reversals could lead to negative rating actions," he concluded.
More... (http://www.dr1.com/index.html#9)