Fitch Lifts Argentina’s Credit Rating to ‘CCC+’ as Milei’s Reforms Gain Traction

Fitch Ratings raised Argentina’s long-term foreign currency debt rating from “CCC” to “CCC+” on May 12, marking its first upgrade since President Javier Milei took office in December 2023.

The agency cited the government’s elimination of 14-year currency controls in April 2025 and a $20 billion IMF loan as key drivers, signaling cautious optimism for economic stabilization.

Sovereign bonds maturing in 2035 rose 0.7 cents to 68 cents per dollar following the announcement, reflecting investor confidence in Milei’s austerity agenda.

The IMF’s 48-month Extended Fund Facility, approved April 11, includes an immediate $12 billion disbursement-the largest initial tranche in Argentina’s history-to support a 1.8% primary surplus target and transition to a flexible exchange rate.

Combined with $9 billion from the World Bank and Inter-American Development Bank, multilateral funding for 2025 totals $21 billion, bolstering central bank reserves that had dwindled to $24 billion (net reserves: -$7 billion) by March.

Replacing rigid currency controls with a managed float system on April 14 allowed the peso to trade within a 1,000–1,400 per dollar band, dismantling monthly $200 purchase limits and narrowing the gap between official and parallel exchange rates.

Argentina’s Fragile Recovery Gains Momentum

Monthly inflation slowed to 3.7% in March 2025 from 20% in early 2024, while GDP is projected to grow 5.5% this year after a 3.5% contraction in 2024.

Poverty rates dropped sharply in late 2024, attributed to deregulation and spending cuts, though inflation risks persist from peso devaluation. Debt obligations remain critical, with $8.6 billion due in 2025 and over $11 billion annually through 2030.

Milei’s reforms face political headwinds ahead of October’s midterm elections, where his minority government must defend austerity measures against Peronist opposition.

While Fitch’s upgrade aligns with Moody’s “Caa3” positive outlook, S&P Global maintains a “CCC” rating. Analysts at JP Morgan and Bank of America now recommend peso-denominated bonds, citing reduced macroeconomic volatility.

Success hinges on sustaining fiscal discipline through elections, curbing inflation post-devaluation, and attracting private investment.

For Argentina, the upgrade offers a fragile lifeline-a chance to rebuild credibility after decades of crisis, provided Milei’s bet on free markets outlasts political turbulence.

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