Moody’s lowers Colombia’s outlook to negative and maintains rating

The risk rating agency Moody’s confirmed on Thursday Colombia’s credit rating at Baa2, although it lowered the stable outlook to negative due to the challenging macroeconomic conditions facing the country.

These conditions “can impact fiscal consolidation, the growth trend and the cost of borrowing“Moody’s added.

Regarding fiscal management, “Lower than expected economic growth is negatively affecting tax revenues and rising borrowing costs are putting additional pressure on public finances“, the rating agency detailed in a statement.

On the other hand, “The affirmation of Colombia’s Baa2 rating is supported by continuing evidence that the country’s institutions function effectively as checks and balances that prevent a break with Colombia’s record in prudent policymaking.”.

“Furthermore, to date, the Government’s debt burden remains in line with that of its Baa-rated peers.“, according to the information.

As for the central bank, “continues to pursue monetary policy independently, with a clear focus on reducing inflation and anchoring inflation expectations”.

“Given the negative outlook, near-term improvement is unlikely. A change to stable would be considered if fiscal consolidation efforts demonstrate their effectiveness in reducing the fiscal deficit, allowing the Government to meet the debt objectives set by the International Monetary Fund (IMF).“, the agency concluded.

Moody’shas placed a vote of confidence in the country, highlighting the strong decisions of spending cuts in order to maintain the fiscal and macroeconomic sustainability that the Government of President (Gustavo) Petro has taken.“said the Minister of Finance and Public Credit, Ricardo Bonilla.