The rating agency Fitch upgraded the prospect of sovereign creditworthiness of Spain from negative to stable, citing improvements in financial management. The upgrade of Spain by Fitch Ratings means that they removed the possibility of a new deterioration of the state of creditworthiness from the house this short to medium term. However this means that the state’s debt continues to be ranked by Fitch in step BBB. Spain has improved its policy in 2012-2013, said the rating agency. The authorities have made a significant labor market reforms to the pension system in the fiscal framework and financial sectors.
However, the rating agency warned that Spain may face other difficulties too. The pace of reform is likely to slow down in 2014-2015 as the outside pressure will ease and approach the elections of 2015, but the effort that has been done so far is expected to put the economy on a sound footing. Among the positives, the Fitch noted that Spain records improved the current account balance, restructured the banking sector out of recession. The ratings continue to be supported by the high value and diversified economy of Spain, which slowly rewritten after the credit bubble, said the rating agency. The big improvement in productivity in 2008 was broad, based and private sector deleveraging is ongoing.
The agency also noted, that the country continues a difficult fiscal adjustment and that the government deficit remains high. Without a commitment to stabilization of the financial and the overall economy, they warned, the situation is likely to get a negative way. In the view of Fitch agency the situation is balanced in terms of the likelihood of improvement or the downside risks. The firm provides a return to Spain’s growth, but stresses that the public debt will culminate in 2015-2016 to 103% of the Gross National Product of Spain.
By Nicole P.