On Thursday, Moody’s elevated Argentina’s long-term debt rating by two notches, moving it from Caa3 to Caa1. However, it continues to reside within the speculative category, as indicated by the risk rating agency’s statement. The agency referenced macroeconomic reforms that have contributed to a reduction in inflation and a resurgence in growth as the basis for its decision. It stated that it believes the risk of default or debt restructuring has lessened due to the gradual removal of foreign exchange restrictions, which “enables a transition toward a more robust foreign exchange regime anchored on building international reserve buffers.”
According to the Moody’s report, Argentina’s economy experienced a growth of 5.9 percent in the first quarter of 2025, “driven by domestic demand and underpinned by a recovery in confidence.” The Caa1 rating is characterized by a “stable” outlook. “Disinflation has contributed to real wage increases, while the fiscal tightening has enhanced the availability of credit that is no longer crowded out by public sector borrowing,” Moody’s stated. Argentina has experienced a notable disinflationary trend for more than a year, culminating in inflation hitting a five-year monthly low in May.
In the spring, inflation was recorded at 55.9 percent on a year-on-year basis over the preceding 12 months. At the conclusion of 2023, the figure surged to 211 percent, coinciding with Javier Milei’s inauguration as president and the implementation of stringent austerity measures, which featured a significant 52 percent devaluation of the peso. In April, the nation secured loans and grants from the International Monetary Fund, the World Bank, and the Inter-American Development Bank, amounting to a total of US$42 billion. The initiative represented “a vote of confidence in the government’s determination to advance reforms,” as noted by IMF chief Kristalina Georgieva, who praised Milei’s “impressive progress in stabilising the economy.”
In exchange, the government of Argentina abolished the majority of the nation’s exchange controls. The easing of restrictions on the purchase of foreign currencies, which have been in effect since 2019, includes the removal of the US$200-per-month limit for Argentine citizens seeking access to greenbacks. Moody’s highlighted that Argentina’s inadequate foreign reserves and inherent structural barriers to foreign investment continue to hinder any potential improvement in its rating beyond Caa1. The nation has required 23 IMF bailouts since 1950, has been excluded from international bond markets, and has frequently expended more than it was able to borrow.