Ratings agency S&P Global on Monday lowered Colombia’s long-term foreign currency sovereign credit rating from BBB to BBB-minus.
S&P said the lower credit rating was due to ongoing fiscal woes caused by low commodity prices.
In spite of far-reaching austerity measures, the 2014 commodity price drop forced the country’s government to increase external debt.
Amid weakened fiscal and external profiles generating diminished policy flexibility, we are lowering our long-term foreign and local currency sovereign credit ratings on Colombia to ‘BBB-‘ and ‘BBB’ from ‘BBB’ and ‘BBB+’, respectively.
S&P said it expected Colombia’s government debt to increase from 35% of the country’s GDP to 38% in 2020.
According to news agency Reuters, the outlook “reflects expectation that established political institutions will contribute to economic stability” and continuity after the 2018 elections.
The credit ratings agency had warned for a possible lower rating since February 2016 when S&P changed its outlook to “negative.”
The current outlook is stable, S&P said.