S&P lower El Salvador’s ratings due to financial crisis

Standard & Poor’s announced on 13 October 2016 they lowered El Salvador’s long term rating from a B to a B- due to the country’s political stalemate and inability to find a solution to their fiscal problems and rising debt (La Prensa Grafica). The agency decided to keep El Salvador on the Special Revisions list, which means it is likely their grade might decrease again, and it indicates a negative projection for the country (ElSalvador.com). S&P noted the continued polarization between political parties, Frente Farabundo Martí para la Liberación Nacional (FMLN) and the opposition Alianza Republicana Nacionalista (ARENA), has stagnated fiscal and pension reforms (ElSalvador.com). Due to the inability to pass these reforms, the country’s debt has increased and is projected to reach 60 percent of GDP by 2018 (La Prensa Grafica). Due to these issues, S&P sees El Salvador as a higher risk for investors. International concern has increased and the International Monetary Fund has stepped in to maintain a permanent mission in El Salvador until the political parties and the government can reach an agreement to solve the financial problem (La Prensa Grafica).