Despite recent tax increases and steps that could bolster growth prospects, we expect that Mexico's fiscal challenges will persist over the coming years. In addition, the prospects for substantial fiscal reform or other measures to enhance GDP growth in the second half of the Calderón Administration are, in our view, diminishing. As a result, we have lowered the foreign-currency sovereign credit rating on Mexico to 'BBB/A-3' from 'BBB+/A-2' and the local-currency rating to 'A/A-1' from 'A+/A-1'. The stable outlook reflects fiscal and external indicators that are consistent with the 'BBB' median, the absence of macroeconomic imbalances in the Mexican economy, and the Mexican government's longstanding commitment to macroeconomic stability. (Listen to the related podcast titled, "Mexico: Why Standard&Poor?s
