Peru and a possible credit rating downgrade? this is what the BCR thinks

A few days ago, S&P said in an interview with Gestión that there was a possibility of a downgrade in the country`s credit rating.

After Standard & Poor`s pointed out that it sees a possible downgrade of Peru`s credit rating in the next two years due to political and economic issues, the Central Reserve Bank (BCR) stated that the country "maintains solid macroeconomic fundamentals recognized by all credit rating agencies."

"We are a country with low public debt that has demonstrated fiscal discipline for several decades, as well as monetary stability," said Adrian Armas, the Chief Economist of the BCR.

Despite foreign credit rating agencies acknowledging these Peruvian state policies, the official stated that the other elements considered by each agency in their analyses should be observed.

He emphasized that, on one hand, Peruvian macroeconomic fundamentals remain strong, but on the other hand, there is political instability.

"As we know, what has certainly weakened in our country, and what is also taken into account in sovereign credit risk analysis, is the political issue. The political instability and high turnover of authorities that we have seen since 2016 are affecting," he noted.

Armas argued that "credit rating agencies should have a long-term perspective in their evaluation."