* International credit ratings agency Fitch Ratings has lowered Chile’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from 'A' to ‘A-‘, and its Long-Term Local-Currency IDR from ‘A+’ to 'A-'. In a press release, Fitch said that the downgrade “
reflects the weakening of public finances in the wake of secular pressures to increase social spending in the aftermath of widescale protests in October-November 2019, which have been compounded by the economic downturn precipitated by the coronavirus [Covid-19] pandemic”. Fitch forecasts that the government debt burden will “
continue to increase over the medium term”, due to weaker economic growth prospects and difficulties in consolidating its fiscal accounts. The agency estimates a central government fiscal deficit of 8.5% of GDP in 2020, up from 2.8% in 2019, and projects that general government debt will rise to 34% of GDP in 2020, up from 28% in 2019. It also forecasts that Chile's economy will contract by 5.8% in 2020, due in large part to the measures imposed to control the spread of Covid-19.
End of preview - This article contains approximately 177 words.
Subscribers: Log in now to read the full article
Not a Subscriber?
Choose from one of the following options