Argentina’s 15-year debt repayment dispute with US funds was settled in early 2016 with a substantial debt write-down.
“Since the change in government in late 2015, the new government has pursued economic policies which will gradually improve the country’s financial and economic situation. The change in government has also raised investor confidence in the country, which will contribute to higher growth rates for the economy,” says Stefan Karlsson, head analyst at EKN.
Argentina's previous currency controls have been lifted and the currency has been floated. The country's relationship with creditors has normalised, giving it access to international capital markets in the long term.
“A lot remains to be fixed. The national budget is still in a major deficit and action must be taken to cut spending and strengthen revenue,” says Stefan Karlsson.
EKN's outstanding guarantees for exports to Argentina total SEK 275 million as at 1 November 2016.
EKN is also upgrading Guyana from country risk category 7 to 6 and Honduras from country risk category 6 to 5. EKN only has guarantee exposure to one of these two countries, Honduras, amounting to SEK 14 million.
EKN is also downgrading Belize from country risk category 6 to 7 and Trinidad and Tobago from 2 to 3. EKN does not have any outstanding guarantee exposure for exports to Belize, and EKN’s guarantee exposure to Trinidad and Tobago is SEK 2 million.
EKN does not have any outstanding guarantee exposure to Togo in West Africa, which has now been upgraded from country risk category 7 to 6.
EKN monitors developments around the world and assesses the risk of payment difficulties. This assessment is summarised in a country policy, where each country is placed in a country risk category from 0 to 7. The lower the number, the better the credit rating the country has. The assessment is made on an ongoing basis, and in annual regional reviews in collaboration with the other OECD countries.