After the victory of Sergio Massa in the first presidential roundcredit rating agency Moody’s issued a warning to investors, noting that the country will face a “ high risk of default” in 2024, with debt maturities for a total of US$14 billion, and in 2025, with new maturities for an additional US$13 billion.
Moody’s Investors Services highlighted that in the second roundvoters will face a choice between maintaining an unconventional political stance that has generated significant macroeconomic imbalances or a shift toward economic policies more liberal that would imply a significant adjustment.
The report states that “regardless of who wins the runoff, given that none of the parties will have a majority in Congresswill be forced to forge alliances to implement policies, which will increase governance risks in a very difficult macroeconomic environment.”
Jaime Reusche, Moody’s vice president of credit, warned that even if the next administration takes steps to correct existing distortions, the risk of default by the sovereign in 2024-2025 remains high.
Moody’s: the background
A previous Moody’s report, issued in early October, had already warned about the fall of the Argentine economyforecasting a contraction of 3.5% in 2023 and an additional 2.5% in 2024, with inflation forecasts of 200% in 2023 and 350% by 2024.
Inflation and economic growth remain areas of concern. Martina Gallardo Barreyro, Vice President and Senior Credit Officer of Moody’s, He highlighted that the scenario is uncertain, especially in the midst of a change of government, which makes it difficult to predict the policies that will be applied.
“High inflation is expected to persist, as well as lower demand for fuel and volatility in international crude oil prices,” Barreyro said.
Likewise, he emphasized that economic recovery will take time, with inflation as one of the points of greatest concern. Although an inflation forecast of 350% is mentioned, Uncertainty about future policies makes it difficult to accurately predict what will happen.
“Argentina’s economic outlook remains challenging and its evolution will depend largely on political decisions and international circumstances,” he concluded.
Source: Ambito
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