Finnvera revised its country risk classification


Finnvera monitors 140 political risk countries and classifies them into country risk categories 0–7, with category 0 as the lowest country risk rating. Country risk categories are reviewed by region once a year in cooperation with the other OECD members. At the latest meeting, it was time to update the classifications of countries in Latin America, the Caribbean, and Western and Central Africa. It was consequently decided that two countries would be upgraded in a better category and three countries downgraded in a weaker category.

Despite the slowdown in global economic growth, the economies of many countries in the regions now considered have continued to grow, though some opposite trends have also occurred. Especially in countries that are dependent on the exports of oil and other raw materials, the economy has taken a negative turn as income from exports has shrunk. Despite the gloomier economic outlook, political and social stability has largely continued to evolve in a positive way.

Brazil’s country risk category downgraded from 3 to 4

Brazil’s economic growth has been slowing down for the fourth consecutive year and corruption scandals have fuelled a political crisis. In consequence, the outlook of South America’s largest economy is now clearly weaker than before. The prolonged political stalemate, faltering domestic demand, the falling prices of raw materials important for the country’s exports, and the inability to carry out the necessary structural reforms for achieving economic growth mean that Brazil’s prospects will remain negative in the coming years as well. In the longer term, however, Brazil is a large, strong and diverse economy that still has all the prerequisites for emerging from the recession and thriving. With its exposure of over EUR 1.8 billion, Brazil accounts for the third highest country exposure for Finnvera.

Ghana’s country risk category downgraded from 5 to 6

Concern over Ghana’s economic situation has continued for a long time. The country’s public debt has increased, economic growth is sluggish and the value of the currency see-saws. The economy is also burdened by low raw material prices. Ghana’s financing costs are high and currency reserves low. However, the political situation is stable, and the IMF and the World Bank have a strong presence in Ghana. Support by international financial institutions creates prerequisites for improving the situation in the future.

The country risk categories of Benin and Ivory Coast upgraded from 7 to 6

Benin is a politically stable country whose economy is expected to grow in the coming years. The central government debt is relatively low, and the focus in the coming years will be on making important structural changes and improving the business environment. Benin’s main trading partner is Nigeria, whose problems are reflected in Benin as well.

Ivory Coast’s economic growth is very strong, as much as 7 per cent annually. The outlook for the near future is bright, the infrastructure is constantly being improved and effort is made to develop the business environment. The political situation is calm and creates a basis for long-range development.

El Salvador’s country risk category downgraded from 4 to 5

The country’s economic trend has steadily deteriorated at the same time as disagreements in internal politics make it more difficult to carry out the necessary structural reforms. However, El Salvador’s business environment is still at a reasonable level, and the revival of the U.S. economy promises better times for El Salvador’s economic prospects, too.

Gradual opening of export credit guarantees for Cuba

For many years, Finnvera has not granted export credit guarantees for Cuba. In September, Finnvera made Cuba eligible for short-term letters of credit guarantees after the country had repaid its short-term debts to Finnvera. The improvement of relations between Cuba and the United States has contributed to positive developments in Cuba. The launching of medium-term guarantees requires that Cuba and its creditors agree on the multilateral rescheduling of debts. Finland also has claims in Cuba.

The situation in Iran is monitored closely

An agreement in Iran’s nuclear programme negotiations was reached in summer. This started a process that, if successful, would bring Iran into the global economy. Economic sanctions are still in force and Iran is required to comply with the agreement closely under the supervision of the International Atomic Energy Agency (IAEA). For as long as the sanctions are in force, Finnvera cannot grant export credit guarantees for Iran. If the situation changes, the possibilities for making export credit guarantees available for Iran will be reconsidered. The lifting of sanctions will begin when the IAEA verifies that Iran complies with the agreement.


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