Standard & Poor’s Ratings Services lifted Colombia into investment-grade territory, saying the South American nation’s economy has displayed resilience against external shocks, while growth prospects should contain the public sector’s debt burden.
The ratings agency lifted Colombia’s foreign-currency sovereign credit rating by one notch to BBB-, the lowest investment-grade level.
The outlook is stable, reflecting S&P’s expectation that Colombia’s debt burden will stabilize as its gross domestic product and fiscal revenue grow. Earlier this year, Colombia’s government said it expected economic growth of between 4% and 4.5% for all of last year and 2011.
Additionally, deepening domestic capital markets and improved external liquidity should continue to reduce the level of vulnerability embedded into the nation’s debt burden, S&P said.
The rating also reflects the political consensus in Colombia on market-oriented economic policies that have contributed to economic growth and growing investor confidence in recent years. It also reflects an “increasingly resilient economy that provides policymakers with greater scope to use countercyclical fiscal and monetary policies,” S&P wrote.
While the country’s long-standing conflict with armed groups will likely persist for many ears and could cause occasional setbacks, S&P doesn’t expect such events to result in changes to the government’s strategy for economic development.
A number of South American nations–including Brazil, Chile and Peru–have been praised by ratings agencies for more than a year as they were less affected by the global economic slowdown than nations with more developed economies.
(John Kells / Dow Jones Newswires)