On Friday, January 24th, rating agency Moody’s upgraded Argentina’s long-term foreign currency sovereign credit rating from Ca to Caa3. The country’s outlook was also revised from stable to positive. The reason behind this upgrade is the Argentine government’s strong policy shift, which is helping to address economic challenges and stabilize external financing.
According to Reuters, official data released on Monday showed that Argentina achieved a record $18.9 billion trade surplus in 2024, reflecting the effectiveness of President Javier Milei’s economic policies.
Moody’s stated that the national economy inherited by the Milei government was facing rising inflation, depleted international reserves, and widespread economic imbalances, leading to a high likelihood of credit events occurring.
The rating upgrade is attributed to Argentina’s economic recovery, with improvements in the country’s credit fundamentals over the past year. “Decisive fiscal adjustments and measures to halt monetary financing have been implemented and proven effective in addressing imbalances,” Moody’s said.
Due to Milei government’s strict “zero deficit” policy, inflation control, and government commitment to fulfilling debt obligations, Argentina’s financial market has remained active.
This is the first time Moody’s has raised Argentina’s credit rating in five years. Previously, due to the disruption in debt restructuring negotiations during the global pandemic, Argentina faced an increased risk of default and was downgraded in 2020.
On Friday, Argentina’s outlook was also upgraded from “stable” to “positive” as the government continues to make progress in macroeconomic stability planning.
Since taking office as President of Argentina over a year ago, Milei has been working to bring dollars back into the country, reverse years of budget deficits, and curb triple-digit inflation – efforts that Wall Street has applauded.
However, Moody’s cautioned that as Milei moves towards the “next stage” of reforming the national economic plan, including lifting capital and foreign exchange controls, risks still exist.