Peru is among the countries that present low credit risk and high growth rates in Latin America and the Caribbean, the international credit rating agency Moody's Investors Service highlighted.
According to Moody’s analyst, Renzo Merino, Chile, Peru and Paraguay, have low debt burdens, with debt ratios not exceeding 20% of Growth Domestic Product (GDP), presenting low credit risk.
Additionally, we have seen in the region increased demand for domestic debt by non-residents, particularly in financially integrated economies like Brazil, Colombia, Mexico and Peru.
Favored Investment Grade
“Overall, our view is that - on a net basis - the presence of non-residents is a credit positive development, particularly for the four investment-grade countries,” reads the report.
The analyst noted that during the second half of the last decade, high growth was an important driver of the reduction in government debt ratios across the region.
“Robust growth allowed for a decline in debt-to-GDP ratios for the majority of countries,” he said.
However, despite continuing growth, only Bolivia, Nicaragua, and Peru have reported reductions in their government debt ratios over that period.
Inflation Reforms and Goals
Merino pointed out that several governments, including those in Mexico, Brazil, Chile, Colombia and Peru, had pursued reforms and inflation targeting policies that enhanced policy predictability and helped to support improved growth.
“Accordingly, although LAC economies experienced a range of external and domestic shocks, countries have displayed, in general, greater resilience than in previous decades,” he underlined.
High-Growth Group
Within the High-Growth group, we expect GDP growth in Panama and Peru will move back toward trend levels in 2015-16,
For this year, relatively high annual rates of 6.2% and 4.8% are expected for Panama and Peru, respectively.
(END) JJN/JJN/RMB/MVB
Published: 3/27/2015