Fitch ups El Salvador view to stable

Fitch Ratings said it affirmed El Salvador's foreign and local currency ratings of BB+ and revised the outlook to stable from negative.

Fitch said the outlook revision reflects the government's attempt to reverse the fiscal deterioration observed during 2001 to 2002, its progress on tax reform and an improved political environment.

Since August 2002, when the negative outlook was assigned, the government has made efforts to consolidate its finances. As a result, the nonfinancial public sector deficit has declined to an estimated 2.4% of GDP in 2004 from 4.4% of GDP in 2002 in spite of sluggish growth. The reduction in the deficit reflects a drop in reconstruction costs, greater tax collection efforts, and reduced current expenditure.

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