Latin America's Ratings Increases May Slow on Lack of Reforms, Fitch Says

Latin America may see the pace of credit rating increases slow as governments in the region refrain from implementing reforms aimed at broadening their tax base and increasing competition, Fitch Ratings said.

Elections in countries including Brazil, Argentina and Colombia in the next 18 months make the passage of such reforms unlikely, Fitch analysts led by Shelly Shetty wrote in a report.

“Most of the countries in the region are not expected to implement reforms, which may dampen the positive trend in the sovereign creditworthiness in the region,” the analysts wrote. “Owing to the still busy election calendar in Latin America, Fitch does not foresee significant progress on structural reforms that could improve the region’s business environment and competitiveness or increase the governments’ narrow revenue bases.”

Panama, Uruguay and Suriname have a positive outlook on their long-term foreign-currency ratings, meaning Fitch may boost their rankings. Only El Salvador has a negative outlook on its rating from Fitch.

Latin America’s gross domestic product may grow by 4 percent this year, according to Fitch.

To contact the reporter on this story: Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net

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