MercoPress. South Atlantic News Agency

Moody's upgrades Paraguay's rating amid “robust” economic growth

“The investment grade is a crucial step for the sustainable development of Paraguay,” Peña said from Paris

The credit rating agency Moody's Friday upgraded Paraguay's score to “investment grade” thanks to the South American country's robust economic growth. The new status will facilitate access to credit for both the Paraguayan government and the private sector, it was explained.

“The upgrade of Paraguay's rating reflects a combination of factors, including robust and sustained economic growth and our expectations that the economy has become more resilient to shocks,” Moody's said in a statement.

“The stable outlook reflects our expectations that economic growth will remain robust, supported by public and private investment in key infrastructure projects,” it added.

Paraguayan President Santiago Peña said the recognition will improve the country's financing conditions and strengthen the message that his country is an attractive place for investing.

“This achievement is the fruit of decades of effort and dedication to transform our economy and strengthen our institutions,” said Peña from Paris where he attended the opening ceremony of the 2024 Olympic Games.

“The investment grade is a crucial step for the sustainable development of Paraguay, consolidating our economy in the international panorama,” he stressed in a video posted on X.

Peña, a graduate economist, also mentioned that in the 1990s his country faced “great challenges: financial crises, high inflation, and a weakened economy” that left almost half of the population in poverty. But since then “profound reforms and the construction of institutional pillars for development” were set in motion, starting in 2002 with the pursuit of macroeconomic stability through reforms to the then Finance Ministry and the BCP. Between 2013 and 2018, with Peña as Finance Minister under President Horacio Cartes, fiscal reforms were introduced.

Paraguay's economy grew by 4.7% in 2023 and the Central Bank (BCP) projects an expansion of 3.8% for this year, given good performances in the agricultural sector.

In December 2023, Moody's graded Paraguay as “Ba1 positive” while Fitch Ratings said it deserved a “BB+ stable.” The upward trend lifted off in February, when Standard & Poor's raised the South American country from “BB” to “BB+ with a stable outlook,” one notch below investment grade.

Credit rating agencies gauge the risk of bankruptcy or insolvency in countries to help investors make informed decisions. “Investment-grade” encompasses a series of grades, with AAA representing the lowest risk. When these ratings are lowered, investors demand higher returns for assuming greater risks.

Chile tops the list of Latin American countries with an A2 grade, while Argentina is on the other end of the table with a CCC.