In a press release published today, credit rating agency Moody’s maintained the Republic of Chile’s rating at A1 and adjusted the outlook from “stable” to “negative”.
According to the report, the downward adjustment in the outlook reflects rising public debt and lower fiscal buffers in recent years, aggravated by the impact of the COVID-19 shock. In addition, in Moody’s view, risks of subdued growth and greater spending pressures increase uncertainty regarding the ability to prioritize fiscal consolidation.
Moody’s, S&P, and Fitch, have announced over 160 negative rating actions (including rating or downward adjustments to outlooks) on sovereigns globally since March 9th, period that coincides with the global expansion of COVID-19. Moody’s has implemented 45 of these negative adjustments, 10 of which have been in Latin America and the Caribbean.
During the same period, the Republic of Chile’s credit rating, the highest in the region, has been affirmed by these three rating agencies. Moody’s rates Chile at A1, same as Japan, China, Estonia, Israel, and Saudi Arabia.
The Ministry of Finance has responded decisively to the COVID-19 shock, in order to ensure the necessary resources for health sector, protect household incomes and firms, providing liquidity to the real economy and strengthening the credit channel. In addition, the Ministry has made progress on the implementation of an economic recovery plan for the Chilean economy.
The Ministry of Finance reaffirms its commitment to economic growth and fiscal responsibility, the gradual reduction of the structural fiscal deficit and the sustainability of public finances, in line with a necessary post-COVID fiscal consolidation process.
Finally, it is important to highlight that the Republic of Chile maintains favourable access to international capital markets in competitive terms. Fitch and S&P classify the sovereign with “A” and “A+”, respectively, both with “negative” outlooks.