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El Salvador makes progress, but not enough, says Fitch

Thursday, November 15, 2012

El Salvador is making some progress towards fiscal consolidation, but it may prove insufficient given the country's weak economic prospects, Fitch Ratings said in a report.

Fitch currently has a Negative Outlook on El Salvador's 'BB' sovereign rating, which reflects the agency's concerns about the government's elevated debt burden, which constrains its ability to cope with future shocks.

New tax reform and expenditure-cutting strategies could reduce fiscal deficits in 2013 and 2014, but this may not be sufficient to materially improve debt dynamics given relatively weak growth prospects.

Source: Reuters