Andina

Moody's maintains Peru's rating due to soundness of economic institutions

16:41 | Lima, Jul. 2.

Moody's Investors Service on Thursday said that the soundness of Peruvian economic institutions was a determining factor in maintaining Peru's A3 credit rating this year, with a stable outlook, which has not changed since 2014.

"We maintain Peru's rating at A3, with a stable outlook, which is still valid. We made the decision not to change the rating, despite the strong impact of the virus on the economy and fiscal accounts," Moody's Investors Service Vice-President Jaime Reusche told Andina news agency.

"The fact that there are such strong economic authorities gives investors quite a bit of reassurance, and that is also what has weighed on our decision not to touch the rating as it gives Peru the benefit of the doubt that it can recover, and very likely we are going to see an important macro-fiscal policy response to support the reactivation," he added.

Reusche pointed out that —although there are latent risks that put pressure on Peru's rating— Moody's decided to maintain it, even despite the fact that other countries in the region are seeing downward adjustments to their ratings.

"The fact that the rating is maintained in the case of Peru is remarkable, mostly due to the fiscal soundness of the country and the good macroeconomic management that already has a long history," he expressed.

"Economic institutions are extremely strong and world-class, but political institutions are extremely weak due to the fact that we see a weak Judiciary, a high incidence of corruption and informality, as well as low education levels," he added.

As is known, Moody's Investors Service —in its annual review— maintained Peru's credit rating at A3 for its long-term debt in local and foreign currency, with a stable outlook.

In this regard, Moody's stated that despite the negative but temporary impact of the coronavirus pandemic on Peruvian economy this year —which will lead to a record increase in the fiscal deficit— the economy is expected to grow by around 8% in 2021.

(END) CNA/MVB

Published: 7/2/2020
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