Fitch Lifts Ecuador

Fitch has raised Ecuador’s credit rating to B from B minus, it says, based on an improved outlook. The upgrade reflects healthy economic growth, as well as monetary and financial stability underpinned by dollarization and a steady easing of external and fiscal financing risks as a result of favorable international oil prices. Oil production has recovered and is likely to increase, underpinned by development of mature fields through enhanced recovery, Fitch says. The agency sees financing as manageable for the next two years. Although Ecuador’s fiscal deficit could deteriorate to 2.8% of GDP during 2013-15, Fitch does not anticipate financing problems due to the country’s access to Chinese and multilateral funding. Ecuador has precautionary credit lines with China in the event of external shocks, and the World Bank might resume funding for certain projects. The country hoped to tap the international debt markets in 2014, if not before, Francisco Rivadeneira, the country’s international trade minister told LatinFinance earlier this month. Fitch forecasts growth of 3.8% in 2013 and 4.2% in 2014-2015, broadly in line with rating peers. Public expenditure, especially investment, is likely to remain as the driver of growth. The outlook is stable.