Fitch downgrades Nicaragua

Fitch Ratings said it downgraded Nicaragua's long-term foreign-currency issuer default rating to B- from B.

The outlook is negative.

The downgrades reflect a larger-than-expected economic contraction, a growing fiscal deficit, weaker external liquidity and heightened risks of domestic and external financing constraints, Fitch said.

Although the level of violence has subsided since the last review in June, Fitch said the risk of political instability remains high and undermines prospects for an economic recovery.

Dialogue between the government and the opposition made little progress, the agency said, and the government is subject to growing international pressure over its handling of recent political protests.

International observers estimate the death toll from the unrest at about 400 people with a similar number imprisoned, Fitch explained.

The agency said it estimates that in 2018 and 2019, the economy will contract by 4% and 1%, respectively, in line with recent forecasts. This is a steeper contraction than estimated at the last review in June, Fitch said.

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