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SLIDES: Argentine Provinces Update: Navigating The Shock Therapy

SAO PAULO (S&P Global Ratings) Jan. 24, 2024--While the finances of Argentina's provinces have improved in recent years, they came under increasing strain in 2023, S&P Global Ratings said in a report published Tuesday, and will be affected in 2024 by the fiscal adjustment that is part of the national government's "shock therapy" economic policies.

In "Argentine Provinces Update: Navigating The Shock Therapy," we explain that the national government's measures and changes in the macroeconomic environment will have mixed effects on provincial finances. But we think cuts in transfers to provinces, in particular, will be a significant source of strain going forward. And pressure had already been mounting on provincial finances last year because of higher indexation and economic contraction.

The report also notes the fiscal adjustments that some provinces have announced they'll pursue on their own, including budget reductions and hiring freezes. Currently, all of Argentina's rated provinces are rated 'CCC-' with a negative outlook; the ratings mainly reflect external liquidity constraints for the country as well as expected volatility in liquidity that could limit coverage of upcoming debt service payments.

This report does not constitute a rating action.

The report is available to RatingsDirect subscribers at www.capitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by sending an e-mail to research_request@spglobal.com. Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box at www.spglobal.com/ratings.

Primary Credit Analysts:Carolina Caballero, Sao Paulo (55) 11-3039-9748;
carolina.caballero@spglobal.com
Constanza M Perez Aquino, Buenos Aires + 54 11 4891 2167;
constanza.perez.aquino@spglobal.com
Media Contact:Jeff Sexton, New York + 1 (212) 438 3448;
jeff.sexton@spglobal.com

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