The Minister of Finance, José Antonio Ocampo, traveled this Wednesday, September 14, to New York (United States), in order to meet with the main risk rating agencies. According to the head of the portfolio, his objective is “present to the country”, and motivate a positive review from these entities.
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And it is that Colombia lost its investment grade last year in the eyes of Standard & Poor’s and Fitch. The first changed its rating in May 2021, when the tax reform promoted by former Minister Alberto Carrasquilla fell, from BBB- to BB+ with a stable outlook, and in July Fitch Rating made the same determination, and Colombia’s level went from BBB – at BB+ with a stable outlook.
Currently, only Moody’s maintains Colombia’s credit rating at Baa2 with a stable outlook.
“Strictly speaking, this is to introduce ourselves, to present the government program to the rating agencies, they will make the respective rating at the time, and above all it is to see if they maintain us or recover the investment grade. It is a long task”, Ocampo said this week, prior to his trip.
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The head of the Treasury portfolio also said that considers that the prospects for the country are ‘very positive’, and that he will take advantage of his visit to speak with several important investors in the United States.
“We are going to offer them a positive vision of how the Colombian economy is doing, how we are going to make the fiscal adjustment, how the external deficit is going to be improved, how capital is arriving”.
Although the rating agencies are independent in making their decisions, for some analysts, Ocampo’s visit could have a positive effect, although it would not affect the investment grade.
“The investment grade depends on the health of the fiscal situation, our metrics are not going to change quickly, but communication is important and that is something to highlight”, assured Wilson Tovar, manager of economic research at Acciones y Valores.
(See: Record investment of Colombians abroad: how much was it and in what).
Tovar mentioned that Ocampo is an economist widely recognized worldwide, who has been on the board of the Banco de la República, so “regardless of the direction the country is taking, by explaining the commitments and responding for them, it gives the message that Colombia is an institutional country that recognizes the fiscal situation that we inherited of the coronavirus. And that gives peace of mind not only to rating agencies, but also to investors.”
Fitch Ratings
Tovar also said that Decisions such as those that have been taken in relation to raising fuel prices to reduce the deficit are an example of this responsibility in fiscal matters.
“Rating agencies have always, in the history of recent decades, been in contact with governments. The fact that the minister goes and presents the plan is a way of recognizing the importance of rating agencies as agents. The international market sees this very well.Tovar said.
On the other hand, Andrés Langebaek, executive director of economic research at Grupo Bolívar-Davivienda, described as ‘very important’ this meeting.
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“Everything is really related to tax reform. Colombia has a delicate and unsustainable fiscal situation, and to the extent that the minister can explain the reform in terms of collection, spending and debt compliance, it is a factor that can lead to less volatility in the market and against the dollar.”.
Langebaek mentioned that September is for many of the rating agencies as one of the months in which there are review cycles, And because of that, “alerting them about the content of the reform is important”.
However, he acknowledged that although they may modify their qualifications based on what the minister may tell them, “what will count is not so much the good intentions, but what is approved by Congress, that is what ultimately counts”.
LAURA LUCIA BECERRA ELEJALDE
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