Moody’s Boosts Argentina’s Credit Rating, Citing Fiscal Progress Under Milei

Moody’s has upgraded Argentina’s credit rating from “Ca” to “Caa3” with a positive outlook. The agency praised President Javier Milei’s fiscal adjustments for reducing economic imbalances. This improvement reflects Argentina’s decreased risk of default and better debt repayment capacity.

Milei’s government has significantly cut public debt from 156% of GDP in 2023 to 77% in 2024. Projections suggest a further decrease to 50% by 2026. Inflation has also dropped dramatically, falling from 25.5% in December 2023 to 2.7% in December 2024.

Despite these gains, Moody’s warns of potential external vulnerabilities following the removal of exchange and capital controls. The agency also highlights climate risks, given Argentina’s heavy reliance on its agricultural sector. The severe drought in 2023 negatively impacted this crucial industry.

Social inequality and internal political tensions remain concerns for Argentina’s stability. These factors could potentially hinder the country’s economic progress if not addressed effectively. Moody’s emphasizes the importance of managing these issues for long-term growth.

The agency forecasts 3% growth for Argentina in 2025, placing it among the best-performing economies since the pandemic. However, the risk of difficulties with international reserves continues to be a significant concern for the country’s financial stability.

Moody’s Boosts Argentina’s Credit Rating, Citing Fiscal Progress Under Milei

Milei’s administration has focused on reducing inflation and stimulating economic growth since taking office in December 2023. The president’s approach included drastic measures such as cutting the number of ministries from 18 to 9.

The government has also halted most public works projects and reduced funding for provinces, education, and healthcare. These bold moves have contributed to the slowing of monthly inflation rates since Milei’s inauguration.

Moody’s concludes that the success of fiscal policies and maintaining financial stability are crucial for Argentina’s sustainable long-term growth. The agency’s positive outlook reflects confidence in the current economic direction, despite lingering challenges.

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