Argentina got a credit upgrade from Moodys
President Milei has now been running Argentina since 10th December 2023, and his policy of cutting back state expenditure is starting to bear fruit.
He argued that loose fiscal policy and out of control government spending was cancelling out the central bank's efforts to control inflation (which was running at over 200%).
The first thing he did was reduce the number of ministries from 18 to 9 - a lot of public servants lost their jobs, which reduced the govt's wage bill. He deregulated parts of the economy, including removing rent controls. And he stopped all deficit spending, eliminating the need to take on fresh borrowing.
His actions have paid off in that Moody's has lifted Argentina's credit rating score from Ca to Caa3, and has changed their opinion on Argentina's economic outlook from stable to positive.
As a result, Argentina's bond yield fell from 80% to 75.026%. See
It doesn't sound like a big change, but it is. Argentina might not be taking on new debt, but it still has to roll over existing debt. The crippling interest rates demanded by the markets are eating a collosal amount of taxes raised. Argentina won't be out of the woods till interest rates are in the single digits.
For that to happen, the credit agencies need to upgrade Argentina's credit rating further. But they won't do that unless President Milei succeeds in improving Argentina's economy further. It's not a quick process, Milei has another five years of difficult decisions ahead of him. Hopefully Argentinians are patient and stick it out.