A. M. 
Moody’s Ratings’ change of outlook for El Salvador from stable to positive represents a significant signal for country risk, an indicator that measures investors’ perception of the likelihood that a state will default on its financial obligations. Although the sovereign rating remains at B3, the improved outlook suggests that credit conditions could strengthen in the medium term.
Country risk is closely linked to fiscal stability, debt levels, economic growth potential, and institutional strength. When a rating agency improves the outlook, it sends the market the message that economic fundamentals show signs of correction or sustained improvement. In this case, Moody’s highlights fiscal consolidation, deficit reduction, and lower financing needs as key factors.
According to the assessment, the fiscal deficit was reduced by 2025 and is expected to continue decreasing in the coming years. This trajectory contributes to stabilizing public debt, which remains high but is projected to decline gradually. Debt on a downward trajectory reduces the risk of default and improves investor confidence.
Another factor influencing country risk is government liquidity, that is, its ability to cover short-term payments. Moody’s notes that liability management operations and the reduction of short-term debt have lowered financing needs, mitigating immediate pressures on public finances.
Economic growth also plays a key role. The agency estimates that GDP grew more dynamically in 2025 and will remain above the historical average in 2026. Stronger growth facilitates tax collection and improves the debt-to-GDP ratio, factors that contribute to reducing the perception of risk.
Furthermore, improvements in public safety have been identified as a structural factor that strengthens private investment and the business climate. A more stable environment reduces uncertainty and can attract foreign capital, which positively impacts the risk premium.
However, the country faces significant challenges. Public debt remains high compared to similarly rated economies, and the debt restructuring history of 2022 continues to be a factor that markets consider when assessing credit risk. Furthermore, El Salvador’s small and undiversified economy makes it vulnerable to external shocks, especially due to its dependence on the United States for trade and remittances.
In practical terms, a reduction in country risk could translate into lower interest rates for government financing and, eventually, better credit conditions for businesses and consumers. However, this will depend on sustained fiscal and economic improvements being perceived as permanent by the markets.
The positive outlook does not imply an immediate upgrade in the rating, but it does indicate that, with continued fiscal consolidation and macroeconomic stability, El Salvador could strengthen its credit profile. For investors, the key message is that sovereign risk is showing signs of moderation, although it still faces structural challenges that require ongoing monitoring.
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