Burkina Faso’s Long Term Rating Lowered Despite S&P CreditWatch Lift

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Written by Makula Dunbar

Written by Sarah OwermohleFrom CPI Financial

Standard & Poor’s Rating Services (S&P) lowered its long-term foreign and local credit ratings on Burkina Faso to ‘B-‘ from ‘B’ on 5 December 2014, but took the rating off of CreditWatch Negative status it was placed on in November due to political stability.

The outlook is stable and the short-term sovereign credit rating of ‘B’ was reaffirmed at the same time. Burkina Faso was placed on CreditWatch on 3 November 2014 following mass protests that led to President Blaise Compaoré’s resignation after 27 years of rule.

An interim Government, primarily filled with military personnel, has been installed until elections in November 2015. Despite a transition agreement worked out between the army civil society and opposition party leaders, S&P is wary over the implications of the transition government on business and export revenues.

“Even though the transition assembly appointed an interim civilian president–former diplomat Michel Kafando–we consider that military personnel are, in practice, the key decision makers. Lieutenant Colonel Zida is the prime minister and defense minister. Military personnel also have the domestic affairs and the mining portfolios,” S&P said.

“We understand some donors are currently reviewing the legal conditions of their support for Burkina Faso. Even though we anticipate that some donors will continue their programs, Burkina Faso could face lower donor flows, in particular for direct budgetary support,” it added.

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