Moody’s Ratings announced that it maintained Colombia’s rating at Baa2 but changed the outlook from stable to negative.
According to the risk rating agency, this decision reflects that the country’s macroeconomic conditions are complicating fiscal management, associated with weak economic growth, a sustained increase in the country’s borrowing costs that could deteriorate fiscal managemently the country’s credit profile going forward.
“The negative outlook incorporates our expectation that, while the institutional environment continues to support the sovereign’s credit profile, macroeconomic conditions associated with weaker-than-expected economic growth prospects and persistently high government borrowing costs would complicate fiscal management,” Moody’s said.
On the growth front, the rating agency says that Increased political noise and some decisions have contributed to a “negative” sentiment among investors.
“Gross fixed capital formation declined by 9.5 percent to account for 17.3 percent of GDP in 2023, below the average of 21.1 percent over the 2013-22 period. While economic activity is improving in 2024, persistently weak investment dynamics would weigh on a sustained recovery in medium-term growth prospects back to trend growth of around 3 percent and constrain the authorities’ ability to achieve continued fiscal consolidation in 2025-26,” it said.
IN EXPANSION
#Colombia
