Guatemala City, by Veylin Herrera -AGN.- Standard and Poor’s Global Ratings upgraded Guatemala’s credit rating.
The Bank of Guatemala -Banguat- announced that the country was previously rated BB- which means a positive outlook.
However, the agency’s report published on Tuesday rated Guatemala as BB, indicating that the outlook is currently stable.
According to S&P Global Ratings, Guatemala’s rating is principally a result of the country’s resilience and long-standing macroeconomic stability.
In addition, it based this decision on important characteristics such as:
- Strong external position
- Moderate level of public debt relative to GDP
- Cautious monetary policy
Consequently, there is a positive expectation that cautious macroeconomic management will remain constant in the short and medium term, regardless of external conditions.
The agency highlights that tax collection has strengthened over the past two years, increasing the tax burden from 10.7% in 2019 to 12.1% in 2022, mainly as a result of the improvements in tax administration promoted by the country.
Furthermore, the Central Bank’s work in inflation control and its operational independence has achieved a tangible increase of 300 basis points in the monetary policy interest rate since May 2022.
The country will be able to improve in the short to medium term if the political environment and the implementation of policies promote investor confidence.
This will allow for higher-than-estimated economic growth and gradual progress in strengthening the country’s regulatory and legal structure.
Therefore, it is a positive qualification for the country and represents a prospect for Guatemalans’ growth and the development of opportunities.
On the other hand, the rating agency shared the expected results for the country’s economic future, which include:
- GDP growth of around 3.4 % over the next three years.
- Maintenance of macroeconomic stability through national elections for June of this year
- The government’s priority is to maintain economic stability.
Also, it stressed that Guatemala’s external position should remain a rating strength for the coming years.
In this regard, it was reported that the current account has been in surplus for the last seven years, reducing an estimated 1.4 % of GDP in 2022, and is expected to decline slightly over the next few years.
In this way, the Guatemalan quetzal will remain stable thanks to the resilience of remittances, healthy levels of international reserves, and a sustained current account surplus.