The ratings agency also revised its outlook for the economy of the world's No. 1 copper producer to "stable" from "positive."

"The upgrade reflects the growing resilience of the Chilean economy that in turn continues to improve the government's capacity for countercyclical policies in the face of an external downturn," the agency said in a statement.

"The stable outlook balances the challenges of managing further demands for public spending on education and other social programs within the framework of the fiscal rules."

Chile's economy has fared better than expected despite slowing demand from top trade partner China and fallout from the euro zone's debt crisis on the back of brisk domestic demand, healthy prices for main export copper and strong investments.

Earlier this month, Chile's central bank hiked economic growth forecasts and scaled back inflation projections for both this year and next, as buoyant domestic demand and investments are seen remaining firm.

Center>Copyright Reuters, 2012