It went from B + to B
Standard & Poor's said that the failure of the economic program was "a decline in Argentina's debt profile and inflation dynamics"
International agency Standard & Poor's on Monday reduced its Argentine credit rating in foreign and local currency to B from B + and warned that it could decrease if the government continues the adjustment and if "unexpected negative political events" further undermine investor confidence.
With regard to forecasts, the company calculated that GDP would reach 2.5% this year and close to 1% in 2019, but in 2020 it will be small.
"It is possible that inflation will be around 44% and in 2019 it will gradually decline to 25%," the rating agency predicted.
He claimed that the government's net debt this year exceeded 80% of GDP, from 50% in 2017.
"The deterioration in the Argentine debt profile, the path to economic growth and the dynamics of inflation have taken place after the failure of implementing the disputed economic adjustment program, "said the company.
In his report, he explained: "We cut Argentina's long-term government ratings in foreign currency and local currency into B from B + and approved our short-term foreign currency and local currency rating B."
"The outlook for long-term ratings is robust, based on our expectations that the government will implement fiscal, monetary and other measures to stabilize the economy in the next 18 months," he said.
S & P Caution
"Over the next 12 months, we might again downgrade our ratings if unforeseen negative political events or the irregular implementation of government economic austerity programs undermine confidence of investors, worsening government access to market financing and potentially pushing a currency that could affect inflation dynamics, "the company warned.
Despite the warnings, the evaluation agency has ordered it "lower financing needs, a combination of lower inflation and interest rates, and the main expectations of the continuation of economic policy after the October 2019 national electionscould pave the way for economic recovery and limit external vulnerability. "
"Understanding that the sovereign commitment to the economic adjustment program could be damaged after the 2019 national elections would create a similar unfavorable market dynamics that could lead to high interest rates over a long period of time," he said.
He pointed out that "the ensuing deterioration in the public finance profile and its availability to liquidity in order to refinance the maturity of debt could lead to a lower rating."
"We could raise ratings in the next two years, if successful implementation of the policy will lead to a decline in inflation faster than expected, to ensure greater exchange rate stability and a downturn that is not as deep as expected, "he noted.
He believed that "the expectations of the continuity of economic policy after the 2019 election could change the recent deterioration of Argentina's fiscal, monetary and debt profile and improve its long-term GDP growth prospects."
Last week, Fitch Ratings gave a negative picture of the country's financial situation. On Wednesday, the Argentine government debt rating turned downward to "negative", due to the country's "intense economic instability".
According to the agency, "intense macroeconomic imbalances in 2018, characterized by a high drop in peso value, have significantly reduced growth opportunities in the short term."
In May last year, Fitch reduced Argentina's debt from "positive" to "stable". The company also estimated Argentina's economic activity to drop by 2.7% this year and 1.7% in 2019.
It also anticipated an increase in inflation in 2018 by 47% and in 2019 – by 27.5%. Just two months ago in September, it was expected that this fall will be 2.5% of GDP, and inflation will be 40%.
However, the agency believed that the government could achieve the goal of reducing the primary fiscal deficit.
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