Fitch Ratings maintained a stable rating outlook for Taiwan as recent political developments across the Taiwan Strait remain within its rating tolerances, the international agency said in a statement yesterday.
Cross-strait tensions have increased recently after the nation's passage of referendum legislation, followed by President Chen Shui-bian's (
"While it remains highly uncertain how political developments will proceed, Fitch believes President Chen is ultimately pragmatic and cannot afford to endanger US support. He is also mindful of the Taiwan populace's overwhelming preference for the cross-strait status quo," Fitch said in a special report titled Taiwan: Pushing the Envelope.
The agency maintains an A+ and AA rating for Taiwan's long-term foreign and local currency ratings, respectively. Nonetheless, the agency said it will continue to closely monitor campaigning ahead of the potentially close presidential election in March.
"While passage of the referendum law is significant in the development of democratic institutions in Taiwan, use of a referendum could greatly complicate Taiwan and China's relationship by potentially adding the expression of popular will into resolution of the highly ambiguous Taiwan-PRC sovereignty relationship," it said.
Earlier this month, another rating agency, Standard & Poor's Ratings Services, said Taiwan's debt rating won't be harmed by the recent flare-up in relations between the nation and China.
Reaffirming Taiwan's AA- and A-1+ ratings as well as a stable outlook for the nation's debt development, S&P said the heightened political tension across the Strait needs to be seen in the context of the election campaign for the presidential election.
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