(Reuters) - Fitch Ratings on Tuesday upgraded its rating for El Salvador to B- from its prior CCC+ status, along with a stable outlook, citing a reduction in financing needs helped by a recently announced International Monetary Fund (IMF) program.
The B- rating is, however, six notches into the credit rating agency's speculative grade, or junk, status.
Last month, the IMF announced a staff-level agreement with El Salvador on a new loan program for about $1.4 billion to support government reforms.
"Fitch expects the program to support implementation of fiscal consolidation measures which in conjunction with the reduction in outstanding short-term debt owed to domestic banks and buyback of external debt, due to last year's liability management operations, should reduce financing needs," according to a statement from the ratings agency.
Fitch added that successful fiscal consolidation could boost investor confidence and potentially enable future debt issuances.
"Hooah!" wrote President Nayib Bukele in a post on X celebrating the upgrade.
Fitch expects Salvadoran economic growth to slow to 1.9% in 2024, from a 3.5% expansion in 2023, and then pick up to 2.3% growth this year despite the government's heavy debt burden.