BOGOTA, Oct 27 (Reuters) - Colombia will need more fiscal adjustments to keep afloat even though it has responded appropriately to an economy slowed by the global fall in prices for crude oil, a Standard & Poor’s official said on Tuesday.
While Latin America’s fourth-largest economy has an investment grade of BBB, financial markets see possible downgrades in the pipeline after the credit rating agency stripped Brazil of its investment grade last month.
“For the moment what we see is that the response of the government has been in line with what we expected with a rating level like the one we have and we’re watching what the other adjustment measures are,” Roberto Sifon-Arevalo, managing director of sovereign ratings for the region, told journalists in Bogota.
“For the current situation to be maintained, there has to be some type of adjustment, of spending or of income.”
Though the agency does not prescribe solutions, ideally the country will adopt long-term measures, “a new status quo”, Sifon-Arevalo added.
The economy will grow 2.5 percent this year and 3 percent next, he added, well below the government’s expansion predictions of 3.3 percent and 3.5 percent respectively. (Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by David Gregorio)