Fitch Ratings has upgraded Argentina’s rating from ‘CC’ to ‘CCC’ based on certain economic developments that have improved the credit agency’s confidence in the ability of Javier Milei’s government to make upcoming bond payments in foreign currency. without seeking some kind of relief.
Among others, Fitch has highlighted that dollar inflows driven by a successful tax amnesty have started to increase international reserves and should continue to do so as they circulate in the financial system, supporting the sovereign’s access to dollars.
Furthermore, it plays in the country’s favor that the authorities are also studying various external financing optionsalthough none of them have materialized to date.
BCRA reserves have begun to strengthen again after a mid-year setback, as private sector capital inflows have more than offset the capital outflows from sovereign external debt servicewhich has also motivated Fitch Ratings to raise the solvency rating.
On the political level, Milei has advanced its reform agenda despite his party’s small representation in Congress, achieving some legislative victories and avoiding major setbacks. Furthermore, the president retains “favorable popular support” despite the pain induced by economic adjustments.
The result of his match in the October 2025 midterm elections will be critical to the economic outlook, either strengthening or undermining Milei’s ability to advance its agenda.
The Government of Argentina remains committed to a economic stabilization program focused on a aggressive fiscal adjustment to undo past monetary financing of the Central Bank of the Republic of Argentina, a mobile parity exchange rate, negative real interest rates to reduce excess liabilities remunerated in pesos and the preservation of exchange controls to sustain these policies.
Risks
Among the negative aspects for Argentina, Fitch has indicated that risks to payment capacity persistas reflected by the ‘CCC’ rating, given the still uncertain prospects for a transition towards monetary and exchange rate policies that can ensure a lasting improvement in reserves and the recovery of market access.
In addition, Policy differences with IMF continue to cloud outlook of a new program with fresh funding, and it is not yet clear whether or how quickly the upcoming change in the US administration could facilitate a deal.
Likewise, the agency sees it likely that the preservation of exchange controls restrict a strong rebound in investmentalthough a new incentive regime for strategic sectors (RIGI) and microeconomic reform efforts should offer support.
Looking to the future, the possibility of policy reversals or political shocks that undermine stability macroeconomic situation and the prospects for recovery of market access could lead to a rating downgrade.
On the contrary, the sustained accumulation of international reserves and the recovery of market access of bonds, as well as large-scale external financing of some type would lead to an upgrade of the rating action.
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