Moody’s Investors Service lowered its outlook on Costa Rica to negative, citing worries about the country’s rising debt burden and legislative logjam to address those woes.
The ratings firm said large fiscal deficits and a rising debt burden are the main risks to Costa Rica’s credit ratings.
Though the government debt burden remains lower than average for its ratings group, it has increased in recent years. The key reason has been a jump in the fiscal deficit, Moody’s said.
While the government has repeatedly attempted to improve legislation to deal with the rising deficits, it has so far not succeeded. The government is aiming to approve fiscal reform before the next administration assumes power in May of next year.
Costa Rica’s rating stands at Baa3, the lowest investment-grade rating. It is supported by a relatively diverse economic base, and, though the nation is smaller and poorer than similarly rated peers, the economy is growing quickly.
Source: Market Watch