Fri Oct 31, 2014 5:05pm EDT
(The following statement was released by the rating agency) LONDON, October 31 (Fitch) Fitch Ratings has affirmed Lesotho's Long-term foreign and local currency Issuer Default Ratings (IDR) at 'BB-' and 'BB', respectively. The Outlooks are Stable. The Country Ceiling has been affirmed at 'A-' and the Short-term foreign currency IDR at 'B'. KEY RATING DRIVERS Lesotho's 'BB-' rating is supported by its currency peg to the South African rand, which has contributed to a stable macro environment, including moderate inflation. GDP growth has been resilient despite a volatile external and domestic environment. Dependence on volatile South African Customs Unions (SACU) revenues is a weakness. At 42% of GDP, government debt is slightly above the 'BB' median but Lesotho remains a net external creditor. Lesotho's 'BB-' IDRs also reflect the following key rating drivers: Recent tensions illustrate the political risk in a country with a short democratic history and periodical military involvement in politics. Rivalry between Prime Minister Thabane and Deputy Prime Minister Metsing led to open confrontation between the army and the police in the capital city in August this year and the Prime Minister temporarily fleeing the country. International mediation led by South Africa resulted in an agreement by all parties to hold early elections in February 2015. Fitch's baseline scenario is for an orderly resolution. Fitch expects the political crisis to affect confidence in the economy and GDP growth to slow to 3% in 2014, from 5.8% in 2013. The agency expects growth to pick up in the medium term, to 5% in 2015 and 5.5% in 2016 supported notably by the construction of the Lesotho Highland Water Project (LHWP). Fitch's baseline assumes the renewal of the African Growth and Opportunity Act (AGOA), which provides preferential access to the US market for Lesotho's textiles (12% of GDP), in 2015. Non-renewal would result in lower GDP growth. The budget deficit is expected to widen to 2.2% of GDP in fiscal year 2015 (FY15, fiscal year ending in March 2015) from 1.2% of GDP in FY14 reflecting the impact of the slower economy on tax receipts. Fitch expects the deficit will remain around 2% of GDP in the medium term and public debt will decline as a percentage of GDP, to 40% by FY17 (from 42% in FY14). In the longer term, government debt will increase as the financing of the LHWP will increase the primary deficit to 4% of GDP from 2017. Debt could reach 46% of GDP by 2023. Fitch expects the current account to widen to negative 4.5% of GDP in 2014 from negative 1.2% of GDP in 2013 due to a higher trade deficit and continuing weak global environment. The agency expects the current account will deteriorate in the medium term as investment projects funded by government external borrowing accelerate. The higher external imbalance will weigh on official reserves, expected to drop to 3.8 months of current account payments by 2016, from 4.6 in 2014. RATING SENSITIVITIES The Stable Outlook reflects Fitch's assessment that upside and downside risks to the rating are currently well-balanced. The main factors that individually or collectively might lead to rating action are as follows: Negative: - If the early 2015 election does not lead to normalisation of the political situation, it could lead to negative rating pressure if it affects macro stability, GDP growth and potentially external financial support from the international community. - Deterioration in the budget balance due to pressure from non-capital spending and leading to weakening debt ratios. Positive: - Further progress in developing tax receipts that lessen dependence on SACU revenues. -Sustained high GDP growth supported by an improvement in the business environment and favouring a diversification in the economy. KEY ASSUMPTIONS Fitch assumes that economic growth in Lesotho will be supported by a gradual recovery in its key economic partners, namely the US, Europe and South Africa. Fitch assumes there will be no major revision to the SACU revenue-sharing formula that could negatively affect SACU revenues to Lesotho. Fitch also assumes the AGOA will be renewed in 2015. Contact: Primary Analyst Arnaud Louis Director +44 20 3530 1539 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Christopher Findlay Analyst +44 20 3530 1342 Committee Chairperson James McCormack Managing Director +44 20 3530 1286 Add Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, 'Sovereign Rating Criteria' dated 12 August 2014 and 'Country Ceilings' dated 28 August 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Sovereign Rating Criteria here Country Ceilings here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
- Link this
- Share this
- Digg this
- Reprints
Anda sedang membaca artikel tentang
Fich Affirms Lesotho at 'BB-'; Outlook Stable
Dengan url
http://sarapannasiudak.blogspot.com/2014/11/fich-affirms-lesotho-at-bb-outlook.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Fich Affirms Lesotho at 'BB-'; Outlook Stable
namun jangan lupa untuk meletakkan link
Fich Affirms Lesotho at 'BB-'; Outlook Stable
sebagai sumbernya
0 komentar:
Posting Komentar