Moody’s lowers Papua New Guinea

Moody’s Investors Service said it downgraded the government of Papua New Guinea’s foreign-currency and local-currency issuer ratings to B2 from B1.

The outlook is stable.

This concludes a review for downgrade that began in February, Moody’s said.

The downgrades reflect the strain on the country’s foreign-currency reserve adequacy due to heightened balance of payments pressures that will continue over the next two years, Moody’s said.

The downgrades also consider the persistence of unfavorable domestic funding conditions for the government that have increased refinancing risks and eroded debt affordability, the agency said.

The stable outlook is based on a view that the company’s medium-term economic growth prospects remain robust, although lower commodity prices and the consequent fiscal and economic adjustment will weigh on growth outcomes in 2016 and 2017, Moody’s said.

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