Fitch cuts Argentina's rating and projects inflation of 100% this year


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O presidente argentino, Alberto Fernández: relatório de agência de classificação de risco apontou que acordo com FMI não afastou possibilidade de calote
Argentine President Alberto Fernández: a risk rating agency report pointed out that the agreement with the IMF did not rule out the possibility of default| Photo: EFE/Juan Ignacio Roncoroni

The rating agency Fitch reduced this Wednesday (19) Argentina’s long-term sovereign debt rating due to the “deep” macroeconomic imbalances that persist in the South American country.

Fitch has downgraded Argentina’s rating from CCC (substantial credit risk) for CCC-.

In a report, the agency said that the downgrade reflects Argentina’s “deep macroeconomic imbalances” and “a highly limited external liquidity position”, which Fitch expects to affect increasingly. plus the South American country’s ability to pay as foreign currency debt service increases in coming years.

According to Fitch, the extended facilities agreement signed by Argentina with the International Monetary Fund (IMF) in March “has not yet proved to be a solid anchor” to increase the country’s foreign exchange reserves and improve prospects for recovery of access to the international debt market, “increasing the risks of a potential credit event” ”.

Fitch believes that Argentina’s ability to pay its local currency debt is also affected.

According to the agency’s analysis, a large burden of maturities in pesos that expire next year “may be difficult to refinance”, in case the market accelerates its nervousness in the period before the presidential elections in Argentina.

Fitch projects that inflation, one of Argentina’s main macroeconomic imbalances, will reach 060%, against 24% in 2022.

If it reaches this rate, it will be “Argentina’s highest level in decades, driven by monetary excess, global price pressures and devaluation expectations that contaminate fixation behaviors of prices”, he concluded.

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