Standard & Poor’s Ratings Services boosted its outlook on Colombia to positive from stable, saying the country’s push for fiscal reform could improve its debt and interest burdens.
S&P affirmed the country’s triple-B-minus rating, which is one notch into investment-grade territory.
“A gradually declining debt burden, combined with continuity in key economic policies in coming years, could sustain GDP growth, strengthen the resilience of the Colombian economy, and reduce its vulnerability to external shocks, leading to a higher rating,” S&P analyst Joydeep Mukherji said.
Effective implementation of recent fiscal reforms would allow the public sector to save excess revenue during the boom years in order to stabilize the economy during the bad years of the commodity price cycle, S&P said.
The rating firm added that it could revise its outlook to stable if unexpectedly large fiscal deficits, and potentially lower long-term growth prospects, reverse the recent strength of the government’s financial profile.
