Weaker than Dominican Republic but slightly stronger than Liberia and Bolivia.
Is there no end in sight to Argentina’s fall from grace? Not according to ECR contributors. The sovereign has continued its trend decline in ECR’s global rankings since Q2 2012, falling two places to 107th on the back of a 0.3 point fall in its score to 35.5.
The increased risk has seen Argentina overtaken by improving Dominican Republic and in danger of slipping below Liberia (108th) and Bolivia (109th).
In conjunction with a lower score for access to capital, ECR’s panel of 39 Argentina experts has collectively downgraded the country’s political, economic and structural risk assessments this quarter.
The economic downgrade has been driven by concerns about monetary policy/currency stability and government finances, which is not surprising given the country’s fiscal predicament. However, judging the budget for 2013 is difficult in light of the assumptions used, which are vastly out of line with private-sector estimates.
Transparency – an often-overlooked factor – is a particular risk for investors in Argentina, one of four political indicators scoring less than three out of 10, and an issue that has brought rebuke lately from the International Monetary Fund (IMF).
Add into the mix investor concerns about repatriation in light of the country’s history of default and the April nationalization of oil firm YPF, amid an array of other political, economic and structural factors, it seems that for now Argentina remains one of Latin America’s highest risk options.