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Montevideo, December 6th 2022 - 06:49 UTC



Fitch warns Argentina on “growing diplomatic isolation” and “investment shortages”

Saturday, April 21st 2012 - 07:36 UTC
Full article 242 comments
“Western oil firms are likely to view expansion in Argentina with extreme caution” “Western oil firms are likely to view expansion in Argentina with extreme caution”

In an article posted on the Fitch Wire credit market commentary page the rating agency slammed Argentina for its government’s decision to seize a majority stake in YPF from Spain’s Repsol as announced by President Cristina Fernández de Kirchner on Monday.

Fitch expressed on Friday its concern over what it called Argentina’s “a growing diplomatic isolation” and warned the country could face investments shortages.

“We do foresee increased regulatory uncertainty, growing diplomatic isolation, and the potential continuation of unorthodox government policies. We expect this to curtail foreign direct investment (FDI) in key sectors such as energy, utilities, and telecom,” alerted Fitch.

Fitch stressed the government move generates insecurities amongst investors. “This week's move to nationalize YPF, formerly majority-owned by Repsol of Spain, introduces another layer of uncertainty for foreign companies contemplating investment in Argentina,” said the article. “

“Foreign firms already face big hurdles related to foreign exchange controls and restrictions on dividend payments,” Fitch added.

The rating agency pointed out that, even though Argentina is reaching out for the Chinese, Western powers are to remain extremely caution and hesitant to invest in Argentina.

“Possible investment shortfalls in the oil and gas sector could in part be addressed by increased investment by Chinese companies such as Sinopec, which has already invested heavily in Latin American energy projects. However, Western oil firms are likely to view expansion in Argentina with extreme caution, not only as a result of the YPF nationalization, but also because of the government's ongoing intervention in the domestic market through subsidies and price controls.”

Additionally, Fitch also blasted the Argentine government’s trade barriers and other “protectionist measures.”

“In the wake of Argentina's recent moves to tighten import licensing requirements and restrict foreign exchange outflows, any additional protectionist steps could force foreign companies operating in the country to limit new direct investment further, potentially eroding the government's efforts to boost investment and production in strategic export-oriented industries,” it concluded.


Top Comments

Disclaimer & comment rules
  • Think

    Sorry Fitchy.....

    Argentina is not interested in receiving leechy “Foreign Investment”.
    Argentina is not interested in rejoining the “Debt Circus” any time soon.
    Argentina is not interested in abandoning its unorthodox government policies.

    Got that?

    Apr 21st, 2012 - 07:49 am 0
  • Joe Bloggs

    2 think

    I'm with you on this one thinky boy. Argentina should continue down this route.

    Time to cut off the LAN flight to the Falklands also.

    Apr 21st, 2012 - 08:26 am 0
  • Nightingale

    as the loneliness starts to kick in...

    Apr 21st, 2012 - 08:35 am 0
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