The rating agency Fitch Ratings announced this Friday that it upgraded Argentina's debt rating to 'CCC' from CC due to increased confidence in the country's ability to make payments on bonds in foreign currency. Fitch estimated that the inflow of dollars into the 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 to Argentina's payment capacity persist.
"Dollar inflows driven by a successful tax amnesty have started to increase international reserves, and they should continue to do so as they circulate in the financial system, supporting the sovereign's access to dollars," said the rating agency.
Fitch indicated that risks to Argentina's payment capacity persist, despite the rating improvement. In particular, it pointed out that the country's reserves remain low and insufficient to cover all debt maturities for 2025. Furthermore, it forecasted a decline of 3.6% in the Argentine economy for 2024, followed by a recovery of 3.9% in 2025, although subject to exchange rate uncertainty.
Despite the rating upgrade, Fitch warned that the country still faces challenges, as authorities continue to seek external financing options. The agency emphasized the importance of monetary and exchange rate policies that can ensure a lasting improvement in reserves and access to markets.
In summary, although there is an increase in international reserves and greater confidence in Argentina's ability to meet its foreign currency debt obligations, the rating agency maintains a cautious stance due to persistent risks regarding the country's future payment capacity.
