The rating agency highlighted the rejection of the plebiscite on the constitutional reform of social security, but showed concern for the future.
The rating agency Moody’s highlighted the rejection of social security plebiscite in Sunday’s election, but was cautious about the next government’s success in implementing new reforms.
“The rejection of the plebiscite that would have reversed the social security reform reinforces our opinion that a continued attachment to the fiscal frameworkwhich is in line with a favorable evaluation of the institutional strength of Uruguay. However, the attempt to reverse it denotes the presence of potential risks that could hinder the approval and implementation of reforms in the future,” he analyzed. Samar Maziadvice president and senior analyst of the agency and who is in charge of Uruguay’s sovereign rating, in a statement on the national elections to which he agreed Scope.
The initiative promoted by the PIT-CNT It did not manage to reach the threshold of 50% plus one of the votes necessary to be approved. However, it reached 38.8% despite the fact that no party endorsed the Yes ballot, which was seen by the union center as a success. “No one gives up here,” proclaimed its president, Marcelo Abdala, that promised a union campaign to keep on the agenda the demands to lower the retirement age from 65 to 60, equate minimum pensions with minimum wages and eliminate individual savings through the AFAP.
Large operators in the Uruguayan market confirmed to this medium that they view with concern the statements of the presidential candidate of the Frente Amplio (FA), Yamandú Orsiwho will face the nationalist in a runoff Alvaro Delgadoon “reviewing the operations carried out by the Pension Savings Fund Administrators”, understanding that some can be carried out by the State.
Moody’s seems to share the concern about the pressure that the union sector may have on the future government, although he stressed that, regardless of who wins, there will be “continuity in the management of macroeconomic policies, since both candidates have highlighted the importance of fiscal responsibility and to promote economic growth”.
Maziad considered that the next administration, which will take office on March 1, 2025, will face the challenge of “attracting investments that lead to greater economic growth”, whose official projection is 3.5% for the current year closed and 3.2% for the World Bank (WB).
In mid-September, the rating agency had assured that Uruguay’s credit rating “could improve or worsen”, avoiding explicitly defining its vision in the run-up to the 2024 elections and the vote on the plebiscite for constitutional reform of social security.
At the end of the periodic review of the credit note, which is in Baa1Moody’s assured that the possible improvement would occur if the country improves issues related to the fiscal framework, while the eventual worsening would have to do with the erosion of the changes applied in monetary and fiscal matters, something that could have occurred if it triumphed. the PIT-CNT initiative.
Source: Ambito
