(Adds comments from finance ministry statement)

MEXICO CITY, Nov 11 (Reuters) – Mexico’s finance ministry on Wednesday celebrated Fitch Ratings’ decision not to cut its sovereign rating, after widespread criticism of the government’s refusal to unleash fiscal stimulus during the pandemic.

The ratings agency had earlier affirmed the sovereign rating of Latin America’s second-largest economy at BBB-, one notch above speculative grade, or junk, with a stable outlook.

“This affirmation from Fitch comes in the context of unprecedented downward ratings adjustments that ratings agencies have made,” a statement shared by Finance Minister Arturo Herrera on Twitter said.

In it, the finance ministry also reiterated its commitment of fiscal prudence and solid macroeconomic policies it said will pave the way for a sustained economic recovery.

Some observers are more worried about Mexico’s slow growth rather than debt during the pandemic. Mexico’s fiscal response to the pandemic is the smallest among G20 economies.

Fitch said in a statement that the BBB- rating is still constrained by “relatively weak governance and muted long-term growth performance”.

“Fitch expects an overall economic contraction of 8.9% in 2020, twice as large as at the time of the last rating review.”

In April, Fitch forecast the Mexican economy would contract by at least 4% this year.

Elsewhere, it said Mexico’s public health and economy have been seriously affected by the coronavirus pandemic and debt ratios will likely remain higher than before the crisis for the foreseeable future.

However, Fitch highlighted that tax revenues have outperformed expectations and Mexico sought to minimize borrowing in 2020, with the country likely to maintain a tight fiscal stance and implement tax reform in 2022.

In a blow to President Andres Manuel Lopez Obrador, who has made steep cuts to many parts to keep public finances stable, Fitch cut the sovereign rating in April on fears that the economic shock caused by the pandemic will push Mexico in a severe recession.

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