S&P: Peru's climb to investment grade stilted by fiscal, political challenges

Standard & Poor's said it examined the challenges facing the Republic of Peru (BB/positive) in its climb up the rating scale to investment grade in an article titled "Is Peru Heading Toward Investment Grade?"

S&P said despite the continuing strengthening of most of Peru economic indicators, still high albeit declining fiscal and external vulnerabilities and underdeveloped political institutions still preclude Peru's move into investment grade.

"The growing consensus within the political class on an economic policy framework that assures and deepens macroeconomic stability is among the key factors supporting Standard & Poor's recent positive rating actions on Peru," said S&P credit analyst Sebastian Briozzo.

"However, economic advances have not been matched by greater political institutionalization."

Briozzo added Peru's political environment is still characterized by weak political institutions, strong unsatisfied social demands, a highly discredited political class and a society fragmented among economic, social and ethnic lines.

Within this context, the perception that the population at large is not benefiting proportionally from Peru's long period of economic expansion continues to add uncertainty to the country's future social and political developments, the agency added.

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