Scotiabank: Peru has the second lowest country risk level in Latin America

Scotiabank reported that Peru is the second lowest in Latin America, only after Chile, thanks to its high fiscal and payment capacity of the nation. For the Canadian capital bank, this situation would continue in 2022.

Speaking to Andina, Scotiabank’s head of monetary economics, Mario Guerrero, stated that, at the end of 2021, Peru’s country risk, measured by EMBIG (Emerging Market Bond Index Global), settled at 173 basis points as of December 27, showing the second best position in the region.

The indicator is measured based on the difference between the average yield of Peruvian sovereign bonds and the yield of the US Treasury bond. The higher the risk, the fewer investment projects are capable of obtaining a return commensurate with the funds placed, and the lower this index, the more attractive the country is to investors.

In this line, Peru is only surpassed by Chile, with 155 basis points on the EMBIG scale, according to figures from the Central Reserve Bank (BCR). Further behind are Brazil (313 points), Mexico (351 points), Colombia (356 points) and Argentina (1,743 points).

According to the representative, the Peruvian country risk (173 points), as of December 27, was below the Latin American average of 404 points.

“The fiscal deficit is closing, even below what the MEF (Ministry of Economy and Finance) expected in the macroeconomic framework, mainly due to the improvement in public income (…) So Peru’s ability to pay It was not affected and this foundation remains quite solid, “said Guerrero.

In addition, the country has a debt-to-GDP ratio that is one of the lowest in the region and very close to that of Chile, as well as a “record trade surplus” that managed to recover quickly from the pandemic.

Finally, the head of the monetary economy of Scotiabank projected that next year Peru would remain with the second lowest country risk in the region.