MercoPress. South Atlantic News Agency

DBRS ups Uruguay's credit rating

Uruguay's Director of Economic Policy Marcela Bensión

Canadian rating agency DBRS Morningstar upgraded Uruguay's foreign currency sovereign debt score from BBB Low to BBB as a result of Montevideo's “substantial improvement” in the country's fiscal outlook, it was reported Tuesday.

 Among the reasons for Uruguay's one-notch advancement was a general deficit reduction, which is expected to stand at 3.1% by the end of the year, it was explained.

The agency also praised the pension reform bill submitted to Congress, which would cut down the medium-term spending pressure on the country's coffers.

Uruguay's Economy Ministry recalled that since the inauguration of the current government, the country has also improved its ratings with Fitch (December of 2021) and other agencies such as Japan's R&I (October 2022), in addition to this week's announcement by DBRS Morningstar. As per its new status, Uruguay ranks one notch above the minimum investment grade.

Uruguay's Director of Economic Policy Marcela Bensión said that an improvement in the risk rating generated greater attractiveness for foreign and local investment thanks to stronger confidence in Uruguay's economic policy.

She also explained that this recognition benefits society as a whole since a better risk rating allows the payment of a lower interest rate. This frees up government resources built on taxpayers' money to be used in public policies, especially social policies, Bensión argued.

The achievement would also attract foreign and local investors who would subsequently generate more jobs, which is one of the main targets of President Luis Lacalle Pou's administration.

Bensión also recalled that DBRS Morningstar's grading was the third increase in credit quality in a year.