Fitch takes Uruguay back as “stable” and maintains a BBB- rating

The agency Fitch Ratings ratified this Tuesday the rating of Uruguay as BBB- and improved the country’s debt outlook from “negative” to “stable”.

This was announced by the Uruguayan Ministry of Economy and Finance (MEF) in a statement in which it details that this improvement in perspective was achieved after three years, being considered negative.

According to the document, the change was due to “fiscal resilience during the pandemic and the structural improvement of public finances,” as it also highlights that there are better performance in collection and lower debt costs.

Likewise, the agency highlights the “strong social and political stability of Uruguay” together with the “particularly successful” vaccination campaign against COVID-19.

“In the agency’s view, Uruguay’s rating is limited, among other factors, by a ‘slower post-pandemic recovery in relative terms’,’ a high level of indebtedness and its foreign currency component ‘and’ a low policy flexibility given the prevailing level of dollarization and indexation, ‘”the MEF statement details.

In this sense, the Minister of Economy and Finance of Uruguay, Azucena Arbeleche, said in the statement that this improvement in perspective expresses “the confidence of a sustainable economic recovery” that is “underpinned” by the “responsible management” of the government in the fiscal accounts.

“It is also a recognition of the effective management of public policies, both health and economic and social, during the pandemic, which is reflected in the country’s credit strength. We are optimistic that, by maintaining this course, we will be able to consolidate growth with more employment, which is our priority, ”said the minister.

On the other hand, Fitch projects a real growth of the Gross Domestic Product (GDP) of 3.4% in 2021 and in 2022 of 2.7% while it estimates a central government deficit of 4.5% of GDP in 2021.