Fitch Trims Argentina Local Rating

Fitch has downgraded Argentina’s long term local currency rating to B minus from B, reflecting the country’s increased risk in meeting fiscal and external financing needs over the next 2 years and the government’s inadequate policy response to the global financial crisis. Economic growth is likely to decelerate sharply in 2009 to 1.6% due to declining terms of trade, external demand and the current administration’s inadequate policy response which has amplified the external shock on the domestic economy through a deterioration of investor and consumer confidence and higher domestic interest rates. “The government’s attempts to continue to provide a strong fiscal stimulus will be constrained by slower revenue growth and non-negligible financing needs,” says Fitch analyst Erich Arispe. Government debt amortizations, estimated at 6.8% and 5.4% of GDP in 2009 and 2010, respectively, are almost triple the median for sovereigns rated B by Fitch.