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Fitch Ratings has upgraded Costa Rica's credit worthiness and said the outlook for the country was stable.



"The upgrade reflects Costa Rica's better than expected economic resilience during the global credit crisis, steadily improving macroeconomic stability underpinned by lower inflation and higher international liquidity as well as the country's relatively modest external indebtedness," said Fitch, one of the world's major rating agencies.

"Costa Rica has been able to manage balance of payments pressures despite its vulnerability to high commodity prices, structural current account deficit and limited exchange rate flexibility, reflecting its improved shock-absorption capacity," said Director Erich Arispe in a release. '"Moreover, continued accumulation of international reserves, lower dollarization and close relations with multilateral institutions reduce Costa Rica's external vulnerabilities."

Fitch said that tax reform was needed to increase the central government's tax base but it said recent tax proposals face an uncertain future. So it urged cutbacks in government spending.

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