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Chile among ten countries with lowest default risk

In the Sovereign Risk Index 2011 published by the BlackRock Investment Institute, Chile ranked ahead of all other emerging and Latin American economies. Positioned among the ten countries with the lowest default risk, it also ranked close to Norway, Sweden and Switzerland, the world leaders in financial responsibility.

“While most countries have a burden of net debt, [Chile] has good fiscal space, with assets that exceed its net debt and a surplus equivalent to 11% of GDP,” noted Garth Flannery, one of the report’s authors. As a result, Chile is on a par with Denmark and South Korea and better placed than the United States, China and Brazil, which have a much higher level of sovereign credit risk.

The Index, which covers 44 countries, measures indicators across four categories: fiscal space, which looks at the structure of a country’s government debt and its default record; its external finance position with respect to trade and policy shocks; its financial sector health, considering the existence of potential credit bubbles; and, willingness to pay off debts.

Source: BlackRock Investment Institute

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