MercoPress. South Atlantic News Agency

Positive rating outlook for Argentina although warnings on inflation effects

Indec at the heart of controversy and inflation

The Fitch rating agency decided to maintain a positive rating outlook for Argentina, although it warned about the effects of inflation.

In a new report, the agency justified its decision “due to a relatively favourable public debt composition with a reduced risk of the capability to honour short-term expirations, and a high position in international reserves.”

They also praised the “favourable perspective caused by a steady surplus in the current accounts balancing.”

However, the ratings agency viewed as unfavourable the share of public debt, which borders 50.9% of the GDP, and has a limited capability for refinancing.

“Politics have also led to created distortions visible in an unofficial high inflation rate,” it explained.

However Argentina retains a robust growth rate of 9.2% in 2010 and a forecasted 7% for 2011, although tending to 4% by 2013.

Last October Fitch had elevated Argentina’s rating to B.

Inflation measuring has turned into a major controversy in Argentina with the official stats office Indec accused of manipulation, while private consultants are threatened with fines if they make their estimates public.

Congress opposition members have their own monthly index (based on the banned private consultants) which is running double the official one.