BUENOS AIRES, Dec 2 (Reuters) – The possible agreement that the Argentine government reaches with the International Monetary Fund (IMF), which includes a multi-year macroeconomic plan, will be positive to the extent that the country fulfills that commitment over time ratings agency Moody’s said Thursday.
Gabriel Torres, vice president of the sovereign risk team at Moody’s Investors Service, said in a press conference that the signing of the agreement is necessary but not a sufficient condition to improve the rating of the South American country, which is currently at “Ca” with stable outlook, the penultimate level on its scale.
“Is it an important step? Yes, but the step as important or more important is that it be fulfilled and maintained over time,” Torres explained.
“That the agreement is fulfilled, that there is indeed a clear signal that the Government is going to maintain fiscal policies, a sustainable deficit based on financing that Argentina has – not depending on central bank financing and not issuing pesos – that it is fulfilled through time, “he explained.
Argentina intends to resolve this year the renegotiation of a debt of more than 44,000 million dollars with the IMF and will seek approval of its new economic plan by the body before presenting it to Congress, a government source told Reuters in November.
Torres said that the signing of the agreement will surely generate a positive reaction in the markets, but that doubts about its compliance will remain.
“Let us remember that there are elections in 2023. A plan with the Fund will surely require some kind of fiscal consolidation process in the middle of a presidential election. Is the government going to do it? The answer is not clear,” he explained.
The executive recalled the repeated economic crises that the country suffered and stressed that long-term problems will be resolved with policies that are maintained over time, regardless of the governments that assume power.
“The problem in Argentina is less the numbers, less if the deficit is so much, and more the credibility of the medium and long term. If it does not reach 3.3% (of fiscal deficit over GDP forecast for 2022) but the year that is coming is lower (than in 2021) that would be an important positive step “, explained the executive.
Moody’s has a growth projection for Argentina for 2021 around 7.5%, although it said it may be higher.
(Reporting by Eliana Raszewski; Editing by Walter Bianchi)