Investing.com-Moody’s (NYSE 🙂 The grades upgraded long-term grades of foreign currencies and local government of the Government of Argentina from CA to CAA3. Earth prospects have also been changed from stable to positive.
This upgrade is a reflection of the successful Government policy displacement that has facilitated fiscal and monetary adjustments, helping to stabilize economy and external finances. This reduced the likelihood of a credit event. However, there are considerable risks that relate to the ability of the country to cover up the upcoming payment of external debt. These risks could arise from removal of capital control and exchange or from negative shocks that led to a credit event with significant losses for bond owners.
Positive prospects indicate the potential for further improvement of grades as Argentina continues its macroeconomic adjustment. A smooth transition to the open account of capital would be in accordance with higher ratings.
At the same time, Moody’s has withdrawn short -term foreign currency and local Argentina currency, both earlier in not prime (NP), its foreign currency and local currency, insecure grades, previously in Ca, and its foreign currency, not provided for the shelves, previously in (P (P ) Ca, for business reasons. Local ceilings in the country and foreign currencies remain on B3 and CAA1.
The upgrade of grades was supported by an improved credit basis for Argentina last year, due to the effective adjustments of policies that stabilized the macroeconomic environment. President Javier Milei’s administration, who assumed his duty on December 10, 2023, applied a decisive fiscal adjustment and measures to stop financing, which were effective in resolving economic imbalances.
These measures led to a drastic improvement of fiscal accounts, guided by a wide reduction in consumption, resulting in a significant reduction in the load of government debt. The government’s debt is predicted to continue to decline, moving towards 50% of GDP by 2026.
Fiscal adjustment allowed the central bank to take the restrictive attitude of monetary policy, which helped to reduce inflation from very high levels. After reaching 25.5% in December 2023, the monthly inflation fell on one -core digit in March 2024 and consistently slowed down, it was predicted that it would be about 40% in 2025.
Argentina’s external liquidity increased due to a tax amnesty that brought almost $ 20 billion in assets abroad and measures to attract additional influx of foreign currencies, allowing authorities to gradually build international reserves.
However, as Argentina moves to the next phase of the period of macroeconomic adjustment period, which includes the removal of capital and exchange controls, new challenges could occur that could endanger progress to this day.
Positive prospects are based on the constant progress of the Government at its macroeconomic stabilization program. The possibility of Argentina to enter a new program with an international monetary fund (IMF) would further support the external position of liquidity in the country. This would help anchor the feelings of domestic and foreign investors, allowing sovereign to regain access to the foreign market and diversify the sources of funding.
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