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HONOLULU, Hawaii (January 22, 1998 - PIDP/CPIS)---The Government of the Cook Islands, which continues to emerge from significant economic set-backs in recent years, this week received some very good fiscal news.

Standard & Poor's, a leading international financial reporting firm, Tuesday awarded the South Pacific nation of 18,000 –the smallest sovereign ever rated by S & P-- a welcomed and encouraging long-term credit rating of "B-".

In a news release, S & P said "The outlook on the long-term rating is stable."

The "B-" rating means the Cook Islands "currently has the capacity to meet its financial commitment" on current obligations, if there are no adverse business, financial, or economic set-backs.

Reacting to the news, Cook Islands Sir Geoffrey Henry said it is important now that there be no more economic upheavals, "no more nuclear testing in near-by nations, no sudden pull out of Air New Zealand and no deviation by government from the course it has set."

The independent report, he added, is "a far cry from what the naysayers, nit-pickers, and Opposition would have you believe" about the state of the Cook Islands economy."

Among the changes in the way the Cook Islands government now operates, according to the Standard & Poor's announcement, has been the curbing, although not the complete elimination, of a "long standing tradition of public sector patronage in favor of free market reforms."

To improve its financial position, after public debt went into default in 1995-96, the Cook Islands government, according to S & P, "slashed spending, sold assets, and adopted a more disciplined, transparent approach to managing public finances."

Growth prospects, says the credit reporting firm, hinge on "maintaining fiscal stability as aid flows decline, improving the social and economic infrastructure, and, in particular, boosting the tourism sector's competitiveness."

"Now, with a highly credible report card in hand," Sir Geoffrey added, "it is time to give credit where credit is due, namely to all those who supported the reform process" and continue to be committed to it.

S& P notes that negotiations now are under way to settle the government's remaining unpaid obligation, $US 53 million owed to Italy's export credit agency. SACE.

The government's short-term credit rating from S & P is "C".

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