Argentina’s credit rating was lifted up from default ‘SD’ to ‘CCC+’ with a stable outlook after the South American country concluded restructuring its foreign currency debt, S&P Global Ratings said in a statement on Monday. 

“Argentina has concluded its complex restructurings of $66 billion in foreign law foreign currency debt and over $40 billion in local law foreign currency debt,” the global rating agency said in a statement.

“This important step forward provides the opportunity for the government to articulate a broader plan to tackle various post-pandemic macroeconomic challenges, negotiate a new program with the IMF, and work to clear arrears with the Paris Club,” it added.

Argentine President Alberto Fernandez in late August spoke with International Monetary Fund Managing Director Kristalina Georgieva for a new credit arrangement and to assess the impact of the novel coronavirus (COVID-19) on Argentina’s economy.

A stand-by agreement with the IMF in mid-2018 for $57 billion aimed at convincing foreign investors to invest in the country, in addition to supporting the government in fighting against ever-increasing fiscal deficit and skyrocketing inflation.

S&P Global Ratings said there is room for rating improvement for Argentina in the next 12 months if the country successfully negotiates a new program with the IMF to smooth the burdens of the credit repayment schedule, and if economic recovery accelerates to provide stronger fiscal outcomes and lower financing needs.

The rating agency, however, stressed that Argentina still has a weak fiscal profile, monetary inflexibility and limited financing options, adding that the country’s debt burden remains high with more than 70% of central government debt is in foreign currency.

Argentina’s economy is expected to contract by 12.5% in real GDP this year, but rebound in 2021 to expand by 4.8%, according to the agency.

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