Moody’s upgrades outlook on Nicaragua's B2 rating
The positive outlook, according to Moody’s, is based on two key drivers: “continued fiscal stability and favorable economic prospects relative to peers, and Moody's expectation that authorities' macroeconomic policies will mitigate the impact of potential future external shocks.
Managua, Nicaragua; July 21, 2017
In a written statement by Moody’s Investors Service, the agency reaffirmed Nicaragua’s B2 credit rating, while improving the outlook from stable to positive. The country was first assessed in 2013 with a B3 rating, and in 2015, the agency upgraded the country’s rating to B2 with a stable outlook.
The positive outlook, according to Moody’s, is based on two key drivers: 1) “continued fiscal stability and favorable economic prospects relative to peers, and 2) Moody's expectation that authorities' macroeconomic policies will mitigate the impact of potential future external shocks, and support the strengthening of the sovereign credit profile.”
“The affirmation of the B2 rating reflects credit strengths including strong economic growth, a policy framework geared towards maintaining macro-economic stability as well as lower-than-peers debt and interest burdens,” says the document. In that sense, the note also mentions that Nicaragua has been able to diversify its FDI sources, making it easier for the country to keep steady FDI inflows in relation to its GDP.
Nicaragua’s Government has provided the right conditions for investments, which have allowed it to reach an average annual growth rate of 5.2 percent in the country’s GDP during the last five years. Likewise, Nicaragua has further diversified its FDI Inflow sources, going from 22 countries in 2007 to 46 countries in 2015, representing a 109 percent growth.,
An assessing meeting about Nicaragua’s economic performance was held in May with the International Monetary Fund (IMF). Fernando Delgado, Head of the Mission, said that “Nicaragua fits perfectly as a high-growth country within the Latin American region; with a model that has been successful for the past five or ten years, and whose development has been basically based in the attraction of foreign investment.”
Nicaragua’s FDI Inflows are estimated at US$1.4 billion for 2016. Nicaragua’s FDI Inflows registered a compound annual growth rate of 16 percent between 2007 and 2016; reflective of the country’s secure and stable business climate and solid legal framework.
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