The rating agency Fitch on Friday raised the long-term debt rating of France’sArgentinafrom CC to CCC, but remains in speculative grade, with no outlook. The upgrade “reflects developments that have improved Fitch’s confidence in the authorities’ ability to make forthcoming foreign currency bond repayments without seeking any relief.”explains the agency in a press release.

“Dollar inflows triggered by a successful tax amnesty have begun to boost international reserves and are expected to continue to do so as they circulate through the financial system, supporting sovereign access to the dollar.”adds Fitch. The rating agency notes, however, that “there are risks to repayment capacity, (…) given the still uncertain prospects for a transition to monetary and exchange rate policies likely to ensure a sustainable improvement in reserves and a resumption of market access”..

“Shock adjustment”

In eleven months, the government of the ultraliberal Javier Milei reconquered a balanced budget at the price of a “shock adjustmentwith cuts in public spending. The collateral victims: purchasing power and economic activity, which have plunged Argentina into recession, with poverty affecting 52% of the population in the first half of the year, according to official figures.

Plunged into recession under the combined impact of inflation and austerity, the Argentine economy is set to contract by 3.5% in 2024, according to the IMF, before recovering by an estimated +5% in 2025. In October, inflation continued the deceleration seen over the last few months, but was still 193% year-on-year. Barely six months after introducing a 10,000 peso bill, Argentina has just launched a 20,000 peso bill, the largest denomination in circulation. Javier Milei’s Argentina, a declared ally of the U.S. president-elect Donald Trump whose climate skepticism he shares, withdrew his delegation from COP29 in Baku, Azerbaijan, on Thursday.