• version imprimible
Thursday, July 26 de 2018

Minister of Finance comments Moody's Rating on Chile

"The Government and the Ministry of Finance will continue working on strengthening our fiscal position and improving our growth outlook".

"We have always said that recovering our credit rating is a long-term race," said the Minister of Finance Felipe Larraín.

"Chile is paying the consequences of the fiscal deterioration and low growth of the last four years". This is how the Minister of Finance, Felipe Larraín, referred to the downgrade in the country’s risk rating from Aa3 with a negative outlook, to A1 with a stable outlook, announced today by Moody's, rating agency that in August 2017 adjusted the rating perspective down from stable to negative.

The authority specified that between 2014 and 2017 the economy grew at an annual average pace of 1.7% and the fiscal deterioration experienced throughout the period was evident. "First, and by far the most important issue, is that the previous government's commitment to eliminate the structural deficit was not fulfilled, in fact, it increased by a magnitude of four. Second, debt to GDP doubled - from US $35 billion to US $70 billion between the end of 2013 and 2017, reaching a level close to 24% of GDP. Third, the tax reform did not generate the desired results, and fourth, the fiscal deficit rose to 2.8% of GDP in 2017”, Larraín said.

The Minister of Finance noted that the rating decision is untimely: "It is surprising that this decision occurs just when the Chilean economy accelerates its growth and tax revenues have increased above market estimates”.

According to the authority, in light of the arguments put forward by the rating agency, the reduction from Aa3 to A1 should have occurred last year, as was the case with Standard & Poor’s and Fitch. "In technical terms, Moody's appears behind the curve," he said.

The Minister highlighted the positive growth experienced by the economy in recent months, as well as the improvement of expectations of firms and households. He also highlighted the pro-growth reform agenda, which includes initiatives such as the Tax Modernization Plan and Modernization of the State, and fiscal reforms, including the austerity plan of US $4.4 billion and the Autonomous Fiscal Council bill.

"We have always said that recovering the country’s credit rating is a long-term race. The Government and the Ministry of Finance will continue working on strengthening our fiscal position and improving our growth, pillars for the well-being of all Chileans”, the official said.

With this new A1 Rating, Chile reaches the rating level of countries such as the Czech Republic; Estonia, Israel, Japan or Saudi Arabia, among others.

Ir arriba