Moody’s He performs on Tuesday at City Buenos Aires INSIDA LATAM ARGENTINA 2025an event in which the credit ratingrifier offers its gaze on how the national economy progresses, but above all, in which it exposes the results of an exhaustive evaluation About fiscal healthwhich at the end of the day is what matters so that the country recovers Access to international markets.
It should be remembered that Argentina’s credit qualification that executes Moody’s It was updated in January 2025 and He went from ca to Caa3. In this regard, Jaime Reuschevice president of the firm, drew the map for the return to the markets and praised the tax engineering of the government of Javier Milei, although he warned that the program is in its part “more dangerous” Because any shock can trigger the economic course.
The external financing strategy under the magnifying glass: time, cost and prudence
From now on, the risk rating issued the short term of Argentina to international markets. This is because although there were improvements in terms of reserves thanks to the disbursement of the International Monetary Fund (IMF), the country maintains a “Structural deficit in your balance of payments “. Even with commercial surplus and international assistance, Reservations were lostwhich shows that the external imbalance persists, the qualifier stands out.
Reusche also mentioned that Market memory about Argentina “is very negative.” And in recent history there were multiple experiences of failed exchange flotation. “Despite the current fiscal balance, The background play against And they limit the speed improvement speed, “the expert slipped.
He also stressed that Argentina signed 22 programs with the IMFand None came to fruition. He mentioned that certain persists “structural weaknesses in institutional quality “which include Low effectiveness of the judicial system and of public policies. “This affects the ability to implement and sustain reforms, which is key to improving the credit profile,” he warned.
“Argentina has one of the worst records of sovereign debt: nine official defaults, or ten if the exchange of 2023 is included. Although the current government was not responsible for the last breach, The past weighs In the qualification, “he told the Auditorium Reusche
Looking ahead, he also sees some pressures that come from the hand of the Recovery of economic activity. It happens that Moody’s estimates that the demand for imports will increasewhich could further weaken the external balance if there is no sustainable currency income. In addition, he believes that The exchange rate could be overvaluedwhich limits competitiveness.
Finally, Reusche estimated that it is a matter of time for Argentina Moody’s It maintains a positive vision for the country: “I think it is a time issue. I do not think it is missing, honestly: it is a matter of the markets to calm down a little more. It has to do more with the global issue than with the domestic,” he concluded.
How Argentina is qualified: four key factors
When Moody’s He qualifies a country focuses on four pillars: economic, institutional, fiscal and susceptibility to shocks. “We do not qualify the economy in general, but the ability of a government to repain its debt and its vulnerability to a crisis,” Reusche launched.
In October-November of last year, the photo was as follows for Argentina:
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Economic strength: moderate (BA3).
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Institutional strength: weak (SW2).
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Fiscal strength: clearly weak, with public debt of more than 100% of GDP.
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Susceptibility to clashes: elevated.
For May, Reusche Observe a significant improvement in economic strength (it increased two levels, although it remains moderate). The institutional strength No He changed: “credibility is not earned in six months.” While fiscal strength has also improved on two levels, and the adjustment continues to settle.
In the words of Reusche, All factors show an improvement, which explains the increase in the January qualification and Open the door to new improvements in the coming months “he launched.
Fiscal strength in recovery, but with alert signs
For Moody’s The debt profile improved “without a doubt.” In 2023, it exceeded 100% of GDP; In 2024 he went down and tends to sustain that trend, by constituting “a cornerstone of the economic building under construction” by the Milei team. However, with the recovery of demand, “The commercial balance no longer shows the same fortress as in 2024 “.
“What is then the great risk of phase 2, if we have this artillery, if the imbalances are in the process of correction and there is fiscal balance? The answer is in external finances“The expert said.
And he added: “If the commercial balance of Argentina is analyzed: in 2021 there was surplus that held external accounts. In 2022, that surplus was reduced. In 2023, the panorama was catastrophic, with a bleeding of attributable reserves, in part, to the drought. This was corrected in 2024, which raised a more surface balance that helped the adjustment. However, despite this adjustment and to the entrance of US $ 20,000 million by the laundering, reservations were lost in 2024, which shows that a commercial surplus is not sufficient by itself, “he concluded.
Source: Ambito
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