Fitch Ratings reported this Friday, April 26, that Peru’s credit rating remains negative (BBB) but now carries a negative outlook as well.hours after S&P reduced its evaluation of our country – although it continues with the outlook stable-.
The high level of political uncertainty and the deterioration of governance have affected private investment and GDP growth prospects, Fitch noted, leading to a negative outlook.
According to the rating agency, Dina Boluarte has a weak mandate and has remained in the position of president thanks to the right-wing parties. Release of the AFPs approved by Congress would also impact internal financial markets and increase fiscal pressures.
However, Fitch emphasizes that Peruvian macroeconomic policies have remained resistant to the political problem and the economic crisis, but even so, it is being “put to the test.”
What is the difference between S&P and Fitch’s downgrade?
Fitch Ratings has maintained Peru’s credit rating as negative for more than three years, but now, it has also taken its perspective to that level. On the other hand, S&P downgraded but has a stable outlook. Both were the same until yesterday.
How will the Peruvian economy fare in 2024, according to Fitch?
Fitch Ratings predicts that, after the 0.6% contraction of GDP in 2023, this year it will recover 2.6% as a rebound.
On the other hand, he believes that the fiscal deficit objective of 2% of GDP is optimistic because there are risks derived from the possibility of greater social spending that would prevent compliance with the rule.
By 2024, they estimate that Peru will have financing needs of US$10 billion, about 3.8% of GDP.
Source: Larepublica
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