Buenos Aires. Rating agency Fitch Ratings said Friday it upgraded Argentina‘s debt rating to ‘CCC’ amid greater confidence in the country’s ability to make bond payments in foreign currency.
The change in credit rating shows a gradual improvement in Argentina’s economic prospects after years of fiscal instability and could potentially expand the country’s access to international financial markets.
Fitch assessed that the inflow of dollars to the southern country is reflected in an increase in the international reserves of the central bank (BCRA), a situation that should continue, although it noted that risks persist in Argentina’s payment capacity.
“Inflows of dollars driven by a successful tax amnesty program have begun to lift international reserves, and should continue to do so as they circulate in the financial system, supporting sovereigns’ access to dollars,” Fitch said.
Argentina faces significant debt payments of $4.3 billion in January and July 2025, in addition to approximately $2.3 billion in foreign currency bond payments scheduled by the central bank and $2.7 billion by the central bank. of the provincial governments, he calculated.
Argentina’s current international reserves, which are around $30 billion, “remain low and insufficient to make those payments,” Fitch said, given that the holdings are “mostly in a swap with China that is not freely usable.” , and 5.4 billion dollars in gold that would have to be sold first.”
The rating agency estimated that Argentina’s economy will fall 3.6 percent in 2024 and recover 3.9 percent in 2025, in a rebound subject to exchange rate uncertainty.
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How does the recent upgrade in Argentina’s credit rating from Fitch Ratings impact the perception of investors and foreign investment in the country’s economy?
Interview with Guest 1:
1. We have seen a recent update from Fitch Ratings in Argentina’s credit rating from ‘CCC’ to ‘B’. What does this mean for the country’s economic outlook and prospects for international financial markets?
2. Can you shed light on the factors leading to this rating upgrade, particularly the inflow of dollars and increased international reserves? How do you assess the sustainability of these positive developments?
3. However, the report also highlights that Argentina’s reserves remain low and not freely usable for payment purposes. Could you elaborate on this concern and its implications for future debt repayments?
4. Furthermore, there is an upcoming debt payment of $4.3 billion due in January and July 2025, along with additional payments from central banks and provincial governments. How likely is it that Argentina can meet these obligations given its current financial situation?
Interview with Guest 2:
1. The recent tax amnesty program has proven to be effective in bringing in significant dollars, which has helped to bolster the country’s international reserves. In your opinion, what role does this play in Argentina’s economic growth and stability?
2. The rating agency estimates that Argentina’s economy will shrink by 3.6% in 2024 but rebound to 3.9% growth in 2025. Do you agree with these projections? What factors could contribute to the recovery or hinder it?
3. The report mentions exchange rate uncertainty as a potential obstacle to economic recovery. How might this impact investor confidence in Argentina’s economy, and what measures should the government consider to address this issue?
4. The upgrade from Fitch Ratings suggests that Argentina has made strides towards financial stability. However, debt remains a significant concern. What steps should the government take to ensure long-term sustainability and prevent future crises?
