Ratings agency Fitch on Wednesday downgraded Argentina’s long-term sovereign credit rating by one notch to “CCC-” from “CCC” previously, citing deep macroeconomic imbalances and growing risks to the country’s capacity. to repay his debts.
Argentina, which has been forced to restructure more than $100 billion in debt with private creditors and the International Monetary Fund (IMF) over the past two years, has struggled with capital flight, a weakening peso and rising inflation, which is expected to reach 100% this year. year.
Fitch said in a statement that the downgrade reflects Argentina’s severe macroeconomic imbalances and limited external liquidity, which “increasingly undermine the ability to pay as the cost of servicing foreign currency debt increases in the years to come”.
The agency added that a new agreement with the IMF reached earlier this year to replace a huge failed program from 2018 “has yet to prove to be a solid anchor” for the economic policies needed for the country to rebuild its depleted foreign exchange reserves and regain market access. .
Fitch said capital controls had helped limit the outflow of dollars from the country but “did not completely stop the outflow”. The agency noted that foreign exchange reserves had reached about $5.5 billion following a recent boom in Argentine soybean exports, but said they would come under more pressure in the future.
Fitch added that Argentina’s growth this year is expected to reach 4.6%, while it expects inflation to hit 100%, well above last year’s 51%.