Political and fiscal stability are basic conditions for encouraging investment and fostering competition. Political stability will minimize risks to investors such as expropriation, renegotiation of contracts, and political violence. Fiscal stability will increase confidence in the local currency, lower exchange rate risk, and minimize the risk of default by government agencies. Investment grade sovereign and debt ratings issued by rating agencies take into account the level of political and fiscal stability and influence the availability and terms of financing, particularly for long-term investments such as power plants.