Fitch downgrades Costa Rica

Fitch Ratings said it downgraded Costa Rica's long-term foreign-currency issuer default rating to B+ from BB and removed it from Rating Watch negative.

The outlook is negative.

The downgrades reflect persistently wide fiscal deficits, high near-term financing needs due to a steep amortization schedule and budget financing constraints, Fitch said.

The new administration successfully passed a fiscal reform in late December to address fiscal imbalances, the agency said.

Limited near-term yield from the reform and a rapidly climbing interest bill will keep the fiscal deficit higher than peers and the debt burden on a relatively steep upward trajectory, Fitch said.

The sovereign's ability to meet its high financing needs remains uncertain pending congressional approval for external borrowing and amid high domestic financing rates, the agency added.

These financing uncertainties pose risks to macroeconomic stability, Fitch said.

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