Fitch upgrades El Salvador after IMF deal eases financing wants

(Reuters) – Fitch Rankings on Tuesday upgraded its score for El Salvador to B- from its prior CCC+ standing, together with a secure outlook, citing a discount in financing wants helped by a lately introduced Worldwide Financial Fund (IMF) program.

The B- score is, nevertheless, six notches into the credit standing company’s speculative grade, or junk, standing.

Final month, the IMF introduced a staff-level settlement with El Salvador on a brand new mortgage program for about $1.4 billion to assist authorities reforms.

“Fitch expects this system to assist implementation of fiscal consolidation measures which at the side of the discount in excellent short-term debt owed to home banks and buyback of exterior debt, because of final yr’s legal responsibility administration operations, ought to cut back financing wants,” in line with an announcement from the scores company.

Fitch added that profitable fiscal consolidation might increase investor confidence and doubtlessly allow future debt issuances.

“Hooah!” wrote President Nayib Bukele in a submit on X celebrating the improve.

Fitch expects Salvadoran financial progress to gradual to 1.9% in 2024, from a 3.5% growth in 2023, after which decide as much as 2.3% progress this yr regardless of the federal government’s heavy debt burden.