Fitch Ratings Upgrades Korea’s Ratings to A+
The upgrade is based on Fitch’s assessment that North Korea’s agreement in September to abandon its nuclear weapons programme has reduced security risks across the Korean Peninsula. "South Korea’s ratings have been constrained by concerns about threats posed by a nuclear-armed North," said James McCormack, Head of Asia Sovereigns at Fitch. "These concerns have not been alleviated in full, but the risks have diminished with the focus of the six-party negotiations now shifting from whether North Korea would abandon its weapons programme to how and when the programme will be abandoned," Mr. McCormack added.
In exchange for the North Korean commitment, other parties to the talks agreed to normalise relations with North Korea and provide economic, trade and investment assistance, particularly regarding energy supplies. The United States confirmed that it has no military intentions regarding North Korea.
Fitch believes it is inevitable there will be disputes over implementation of the various commitments, as the September agreement makes no reference to timing. Nevertheless, achieving an agreement in principle at the six-party talks ensures they will remain the forum in which the remaining issues are addressed. Fitch had been concerned that, in the absence of six-party progress over the last two years, it was becoming increasingly likely that the North Korean nuclear issue would be referred to the United Nations Security Council. In that scenario, economic sanctions or a forcible disarmament of North Korea would be possible, with implications for regional security and South Korea’s ratings.
North Korea has a poor record on implementing international nuclear agreements, including the October 1994 Agreed Framework with the US. In Fitch’s view, however, the stakes are higher for both sides in the September 2005 Joint Statement. The September agreement is centred on North Korea’s commitment to abandon its weapons programme, which was not even referenced in the previous agreement focused on replacing North Korea’s graphite-moderated nuclear reactors with light-water reactors. Fitch believes the other parties will be disinclined to have the September agreement overridden by North Korean actions that are contrary to its commitments, and they will not allow the implementation agenda to languish. At the same time, there are stronger incentives for North Korea to comply than in 1994, not least because the economic and energy assistance it will receive is desperately needed. Moreover, North Korea is certain to appreciate that reneging on nuclear arms commitments would have more serious consequences than reneging on nuclear energy commitments.
South Korea’s sovereign ratings are supported by continued prudent public finance management and the country’s strong external position, even though recent macroeconomic performance has been disappointing and Fitch’s short-term outlook calls for GDP growth of only 3.5% this year. The 2005 general government surplus is forecast to be 2.3% of GDP, the sixth consecutive annual surplus. At 35% of GDP, government debt is less than the rating peer group median. Exports are approaching 40% of GDP, which is high for a large economy, underpinning ongoing current account surpluses and the continued accumulation of foreign exchange reserves. Net public external credit is projected to reach USD209 billion by year-end.
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2008년 10월 6일 16:30
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