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Montevideo, June 13th 2024 - 01:10 UTC



Peru's PM calls for an end to the “political noise” that earned the country bad reviews

Saturday, April 27th 2024 - 10:56 UTC
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Peruvian politicians are “shooting themselves in the foot,” Adrianzén warned Peruvian politicians are “shooting themselves in the foot,” Adrianzén warned

Peru's Prime Minister Gustavo Adrianzén urged his countrymen to hush down the “political noise” that erupted following the decision by the credit rating agency Standard 6 Poor (S&P) to downgrade the South American country from BBB to BBB-.

“As President of the Council of Ministers, I can only make an appeal to all political forces, to all political actors, so that we act with much more responsibility so that we act thinking about the impact of our decisions. Let us act thinking that this kind of news scares away investors,” Adrianzén said in a press conference. “This political noise disturbs and affects the country's image” and leads “the rating agencies to make these decisions,” he added.

”They say, among the reasons (to reduce the rating), the weak institutional framework, the instability of the country in terms of governance, and even the controversies between branches of government,“ he recalled while insisting that Peru's economic policy was ”solid“ and has ”extremely promising figures for this year and 2025 and 2026.“ He thus warned Peruvian politicians to stop ”shooting themselves in the foot“ because ”all this turbulence and noise affects us and will continue to affect us.“

”This is a call for us to be extremely responsible and cautious and we hope, on the basis of dialogue, to remedy our differences,“ he added.

In making its decision, S&P Global Ratings cited the political uncertainty facing the country, which ”limits growth.“ The agency also mentioned that ”a fragmented Congress and the government's limited political capital weigh on the confidence of private sector investors and pose an opportunity cost to growth, limiting Peru's ability to rebuild fiscal space.“ After last year's contraction, S&P expects a ”moderate“ economic recovery of Peru's GDP in the 2024-2025 period. S&P lowered Peru's long-term sovereign rating in foreign currency to ”BBB-“ from ”BBB“ and in local currency to ”BBB“ from ”BBB+“.

Meanwhile, Fitch Ratings kept Peru's ”BBB“ rating, both in local and foreign currency, but mentioned a negative outlook for the country due to ”continued high levels of political uncertainty.“

In this scenario, Economy Minister José Arista stressed that both Fitch and S&P agree that Peru's credit rating could improve with stable political conditions that support investments. ”According to the rating agencies, there is no political space to make [the] economic reforms that the country needs,” he argued.

Categories: Politics, Latin America.

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