S&P affirms Chile

Standard & Poor's said it affirmed the Republic of Chile's A long-term and A-1 short-term foreign currency sovereign credit ratings and its AA long-term and A-1+ short-term local currency sovereign credit and senior unsecured debt ratings on the republic.

The outlook is stable.

Chile's ratings are supported by a strong policy framework supported by rules-based fiscal and monetary policies and a political commitment to an open economy; a political consensus that has matured on key elements of economic policy; and low and declining public debt burden. Public sector gross debt is projected to fall below 25% of GDP in 2005 from nearly 40% three years earlier, thanks to rapid GDP growth and impressive fiscal surpluses, the agency said.

The ratings are constrained by a relatively narrow economic base and resulting vulnerability to cyclical economic performance, due to the fluctuating price of copper, and a high net external debt burden, the agency said.

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