April 11, 2017 / 4:27 AM / 4 months ago

El Salvador defends finances after Fitch default warning

SAN SALVADOR, April 10 (Reuters) - El Salvador on Monday defended its financial stability in response to rating agency Fitch's assessment it was in default of debt obligations, after the government failed to secure political backing to service interest payments due in April.

Fitch earlier said it judged the tiny Central American country "to be in default on its sovereign obligations" for failing to make interest payments on debt to private pension funds worth nearly $29 million.

Last week, the government, headed by the leftist Farabundo Marti National Liberation Front (FMLN), could not get the necessary support from the conservative opposition to approve a financial package that covered the interest payments.

The government was solvent, said Ricardo Perdomo, who heads the Superintendence of the Financial System, a state-run body charged with overseeing market stability.

"The (non-payment) is not a liquidity problem, and we expect this problem to be solved via political agreement," he told reporters.

El Salvador's finance ministry said the government had the means to meet its obligations, and just needed to secure the necessary parliamentary approval to proceed. (Reporting by Gerard Arbaiza and Enrique Pretel; Editing by Clarence Fernandez)

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