Moody’s “pushes” Paraguay to investment grade

In the annual review of Paraguay’s 2022 country rating framework, Moody’s, one of the world’s three most important risk rating agencies, communicated its decision to raise the country’s economic outlook from stable to positive.

With this, Paraguay is getting closer and closer to investment grade, one step closer to achieving the desired grade, as several countries in the region have already achieved.

It represents an important step for Paraguay, being one of the few countries in the region that managed to raise its outlook and maintain its rating in an international and national context of external shocks.

This positive credit momentum of the country is based on the institutional strength and governance that Paraguay is gaining and which are supported by the set of laws being promoted by the Government as part of the State Reform Agenda, some of which have already been approved in recent years and others are pending approval in the National Congress.

In fact, in the last few years, significant efforts have been made in reforms affecting different sectors of the State, thanks to which the indicator has made considerable progress after seven years.

Today, the result is reflected by the improvement of the outlook, which could soon translate into a rating increase, thus achieving an investment grade.

Moody’s mentions that the approval and implementation of reforms related to the public procurement system, the civil service, and the strengthening of Paraguay’s money laundering prevention framework, as well as reforms to the Tax Fund, will improve the country’s credit profile and the efficiency of public spending, so these must be approved in the short term.

The rating agency indicates that the country maintained a solid commitment to fiscal discipline, despite having experienced several economic shocks in recent years, which led to a prudent and sound fiscal position.

They expect Paraguay to maintain its prudent fiscal policy, ensuring that the debt burden remains moderate, with structural reforms that support the medium-term fiscal outlook and strengthen the country’s institutional frameworks.

Despite the global uncertainty, Paraguay managed to maintain its credit rating with Moody’s, Fitch, and Standard & Poor’s. In that context, many countries in the region suffered reductions in their ratings and outlooks.

Paraguay was one of the few countries whose credit rating was not affected and, on this occasion, received a change in its economic outlook from stable to positive.

With information from La Nación

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