Fitch maintains Cape Verde’s rating and restates stable outlook

19 May 2010

Praia, Cape Verde, 19 May – Credit rating agency Fitch this month maintained its rating on Cape Verde and the country’s outlook as “stable” despite warning of rises in public and foreign debt levels, a source from the bank of Cape Verde said Tuesday in Praia.

Speaking to Portuguese news agency Lusa, the central bank source said that Fitch had maintained Cape Verde’s Long-term foreign currency Issuer Default Rating (IDR) at “B+” and the country’s local currency IDR at “BB-“, whilst considering the country’s outlook to be “stable.”

“In a context of international economic crisis and a rise in Cap Verde’s budget deficit, this rating contradicts Standard and Poor’s December 2009 rating, which considered the “country outlook” to be negative,” the central bank said.

According to the central bank, the rating is due to better than expected performance – as assessed by the International Monetary Fund (IMF) – of the Cape Verdean economy in 2009, notably the budgetary deficit, as well as economic growth.

However, according to Fitch, increased public and foreign debt involve “some risk, putting the onus on sound management of the projects and a strong payoff in terms of growth.”

Projections for 2010 point to an increase in the budgetary deficit to 12.7 percent of gross domestic product (GDP), after 10.8 percent of GDP in 2009. (macauhub)