The Minister of Finance officially announced that the rating assigned by Standard & Poor's to Paraguay, has risen from BB- to BB.
Meanwhile, Moody's Investors Service had already improved the rating of government bonds by one step from Ba3 to Ba2 and changed the outlook from stable to positive, agreeing with S&P in its evaluation criteria.
The determining factors for this situation were, in the first place, Public-Private Partnership Act, positive levels of debt relative to GDP, a political transition adjusted to law, the strengthen of the institutions, monetary soundness, and finally, fiscal responsibility.
The vision of the Ministry of Industry and Trade is more specific, and for them, one of the pillars of this development is the maquiladoras since MERCOSUR countries constitute 80% of export destinations.
This rise in the rating comes with a stable outlook and happens at a key moment in which there is a constant accompaniment of the international financial community to Paraguay.
S&P believes that the progress of recent years in strengthening monetary policy by introducing a regime of inflation targeting and capital strengthening the Central Bank of Paraguay (BCP), with the issuance of a perpetual bond of USD 915 million by the government, was very relevant.
For economic indices calculated by the IFO Institute in Germany and the brazilian Foundation Getulio Vargas, Paraguay is positioned favorably over other regional countries with an Economic Climate Index (ECI) of 135.8, even over Brazil, according to data recorded until April and its average is 82.5.
Fitch Ratings has affirmed the ratings of Paraguay, but assumes that the ratings and outlook are sensitive to a number of assumptions:
- Slow economic growth in Brazil and Argentina 2014-2015. A sharper than expected deterioration in economic conditions could affect the economic performance of Paraguay given the major commercial and investment ties with these countries.
- Soybean price. Shall be maintained at current levels, after a correction of 8.6% made in 2013.
- Funding sources. Paraguay will continue developing and diversifying its sources of funding and access to multilateral funding.
Background. These assessments come after economic data released at the end of 2013: Paraguay got the third highest economic growth of the world, with 14.1%, which makes the outlook
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