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Moody’s Investors Service has mantianed Peru's investment-grade credit rating at A3 with stable outlook, company Vice President-Senior Analyst Jaime Reusche informed.
“Moody's expects Peru's credit metrics to remain near their current levels for the next three to five years,” reads the Government of Peru - A3 stable: Annual Credit Analysis.
“This takes into account the country's fiscal outlook shifts from the recurring surpluses that it recorded over the past decade, toward low, but sustained, deficits against a backdrop of lower trend growth,” Moody's announcement reads.
According to Reusche, although the sovereign's debt ratios will no longer decline on a sustained basis, they will remain stronger than the median for the 'A' rating category.
“The government's balance sheet has been buffered by a substantial level of liquid assets that have been accumulated from fiscal savings,”
the analyst said.
Corruption, a weak judicial system, low levels of education and an inefficient bureaucracy, especially at the local and regional government level, are among the greatest challenges facing Peru from a credit perspective.
“These issues undermine governability and policy execution, detract from the efficient allocation of resources and contribute to a large informal sector,” he pointed out.
“As well as weak institutions, Peru is also hindered by a noisy political environment,” he said.
Although the risk of major political instability is low, social conflicts continue to impose economic costs on the country.
Nonetheless, he added, social indicators are gradually improving due to greater infrastructure investment, an increased state presence in remote areas of the country and improving social services.
Standard & Poor’s and Fitch
As is known, on August 10, Standard & Poor’s Global Ratings retained Peru's long-term sovereign credit ratings in local and foreign currency at ‘BBB+’ and ‘A-’ respectively, which will keep a stable outlook.
On the other hand, on September 29, Fitch Ratings maintained Peru's long-term foreign currency Issuer Default Ratings (IDR) at "BBB+", outlook stable.
(END) JJN/JJN/DHT/RMB
Published: 10/3/2016