The New York-based ratings agency Standard and Poor’s maintained its “BB/B” long and short-term credit rating for Costa Rica Thursday afternoon, adding that the outlook appears stable, according to a statement.
The company also reaffirmed its transfer and convertibility assessment for Costa Rica at “BBB-,” the agency’s lowest investment grade.
S&P’s statement was sanguine in the face of the country’s rising budget deficit, predicting that the government would be able to contain runaway debt through higher tax revenues and budget controls in the next two years. The rating agency’s forecast breaks with gloomy predictions recently from other groups, including Fitch Ratings and the Eurasia Group.
Standard & Poor’s also noted that Costa Rica would likely see an improving economy thanks to a recovering U.S. economy, the country’s largest trade partner, and low international oil prices. A stable political system and continued foreign direct investment would buffer Costa Rica during the next two years from the immediate effects of the deficit, the statement said.
“Standard & Poor’s decision show confidence in the efforts of the government to secure the approval of tax measures that will be presented to the Congress in the coming weeks,” Vice President and Finance Minister Helio Fallas said in a statement Thursday. Those measures include a bill that would establish a value-added tax.