S&P downgrades Ecuador to B-

S&P said it lowered the long-term foreign and local currency sovereign credit ratings on the Republic of Ecuador to B- from B.

The outlook is stable.

At the same time, the agency affirmed the B short-term foreign and local currency sovereign credit ratings.

In addition, S&P downgraded the transfer and convertibility assessment for Ecuador to B- from B.

“The downgrade reflects an erosion of Ecuador's financial and external profile over the last year because of large fiscal deficits, resulting in a higher interest payment burden, and increased sovereign external debt,” S&P said in a news release.

“In our view, the new government will face challenges to effectively addressing large fiscal imbalances (in the context of a dollarized economy), limiting its high funding requirements, and improving relations with the private sector in order to reverse recent poor economic performance. We expect real GDP growth to be around 0.5% this year, equivalent to a contraction of 1% in per capita terms.

“Ecuador's growth performance has been comparatively poor in recent years for a country at its level of per capita income. We project that per capita income will be almost $5,912 in 2017,” the agency added in the release.

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