El Salvador’s credit rating was cut by Moody’s Investors Service, which cited the Central American nation’s weak economic growth and debt ratios.
Moody’s lowered the country’s rating one level to Ba3, three levels below investment grade and the same as Bolivia and Portugal, according to an e-mailed statement today.
El Salvador’s economic growth has averaged 1 percent over the past five years, compared with 2.8 percent in the previous five years, on low and declining investment ratios, Moody’s said. The country’s debt-to-gross domestic product ratio was forecast by Moody’s to remain at about 53 percent of GDP this year.
“Since growth prospects remain weak and the government has a challenging outlook in the years to come, it will be difficult to reduce debt ratios,” the report said.
The economy will expand about 1.3 percent this year and 2.3 percent in 2013, Moody’s said.
“Given the economy’s vulnerability to shocks, risks are weighted to the downside,” it said.