Wednesday, October 27

Moody’s keeps Colombia credit rating, raises outlook to stable

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BOGOTA — Ratings agency Moody’s on Wednesday maintained Colombia’s credit rating at BAA2 and improved its outlook on the country from negative to stable, saying government fiscal measures and post-pandemic recovery will stabilize its debt.

Colombia’s stronger-than-expected economic recovery shows the country’s resilience, Moody’s said, assuming the next government keeps prudent economic policies.

Earlier this year, Moody’s said it would wait to see what tax reform was passed by Colombia’s congress before deciding whether it would keep or trim its investment grade rating.

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Lawmakers approved a $4 billion reform, which will raise business taxes and enshrine cuts to government administrative spending, in early September despite objections from unions and other groups.

“The affirmation of Colombia’s Baa2 ratings is supported by the government’s track record of prudent macroeconomic management and capacity to build consensus and promote policies that foster economic growth and support fiscal metrics,” the agency said in a statement.

“The stable outlook reflects Moody’s expectation that the fiscal measures approved by the government and the post-pandemic economic recovery will support debt stabilization,” the agency added. “The stable outlook also assumes that the next administration will maintain prudent macroeconomic policies.”

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The statement was hailed by Finance Minister Jose Manuel Restrepo in a recording as a recognition of the government’s fiscal efforts.

Moody’s decision sets it apart from fellow agencies Standard & Poor’s and Fitch, which earlier this year cut the country’s ratings to junk.

Analysts have repeatedly warned that the tax reform will offer only short-term fiscal relief and the next government – ​​set to take office in August 2022 – will face pressure to propose a more structural bill.

The central bank’s technical team last week raised its growth estimate to 8.6% for this year, from a previous 7.5%.

(Reporting by Nelson Bocanegra Addition reporting and writing by Julia Symmes Cobb; editing by Diane Craft)

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