BEIJING - Dagong Global Credit Rating Co Ltd, China's leading rating agency, on Monday maintained both the local and foreign currency sovereign credit ratings of the Republic of Madagascar as CCC, and each with a stable outlook.

The rating reflects that Madagascar's political situation has shown signs of stabilizing and the economy has moderately recovered on the interim government's stimulus policy, Dagong said.

However, the country failed to get a higher rating as the government's solvency has not improved substantially due to large fiscal deficits and government debts, as well as current-account deficits caused by an enlarging trade deficit, the agency said.

The agency said the fact that the interim government had not been internationally recognized, which had made getting foreign economic aid difficult for it, was the main obstacle for Madagascar further boosting solvency.

But surging investment from emerging economies in its mining sector, a recovering tourism sector and government tax reduction polices will all help buoy the economy, it said, expecting the economy to grow 2 percent and 2.5 percent in 2012 and 2013, respectively.

Dagong predicted that the government deficit will fall to 2.8 percent and 2.5 percent in 2012 and 2013, respectively, from 3 percent in 2011, while its debt to GDP ratio will rise to 37 percent by 2013.