The rating agency Fitch lowered the rating of Panama's sovereign debt from investment grade to speculative territory, considering fiscal and governance problems aggravated by the closure of the country's largest copper mine.
Fitch cut the long-term foreign currency rating to “BB+” from “BBB-“, with a stable outlook. According to data from LSEG, S&P Global Ratings and Moody's still have Panama's sovereign rating within investment grade, which is a requirement for the investment of many funds, although the former assigned the country a negative outlook in November.
“The downgrade of Panama's rating to 'BB+' reflects the fiscal and governance challenges that have been exacerbated by events surrounding the closure of the country's largest mine,” Fitch said in its report, referring to Minera Panamá. from the Canadian First Quantum.
Panama decided in November of last year to close the Minera Panamá copper deposit, the largest in the country, after a series of protests by environmental and social activists.
Panama will celebrate elections general elections on May 5 and Fitch expects any of the likely presidential winners to engage in fiscal consolidation.
“However, the expected slowdown in growth, the tense social context and party fragmentation are likely to limit the scope for action, and the recovery of fiscal space and credibility will take time,” he added.
Fitch had granted investment grade to Panama in March 2010, according to its website.
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