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Related Content: Latin America Fiscal Challenges Persist in 2025 After Slippage in 2024

���������ֳ�-New York-08 April 2025: Public finances remain the key credit challenge facing Latin American sovereigns, ���������ֳ� says in a new report. Fiscal results for 2024, published by all the region’s sovereigns besides Bolivia, show a trend of broad slippage. ���������ֳ� expects fiscal recoveries in 2025 in its March 2025 Sovereign Data Comparator, but with downside risks.

Fiscal positions worsened last year for most Latin American sovereigns, and in most cases by a greater magnitude than we had expected, especially in Panama and Colombia. In places where fiscal balances remained stable or improved, this was often due to extraordinary factors, signalling underlying challenges. Spending pressures remain the primary source of fiscal challenges, rather than revenue underperformance. Only Argentina and Ecuador achieved major fiscal consolidation. Guatemala and Nicaragua preserved strong fiscal positions.

We expect fiscal recoveries in most sovereigns in the region in 2025, as commodity-linked revenues rebound, and spending increases delivered in 2024 are pared back. Exceptions include Brazil, where monetary policy tightening will significantly lift interest costs and the deficit, but other fiscal efforts could keep the primary balance stable. Risks to fiscal performance are to the downside given a deteriorating global backdrop, which could spill over into domestic activity and revenues, and political pressures that could complicate spending-focused consolidation efforts.

���������ֳ� expects debt/GDP to continue rising in the region’s largest economies, due to weak fiscal positions, and GDP stagnation in Mexico. Stronger fiscal positions and growth could keep debt/GDP broadly stable in Central America and Peru, while Argentina’s debt trend is improving but remains sensitive to uncertain FX and monetary variables.

Fiscal trends have been central to most downgrades and upgrades in the past five years, and will be important factors in resolution of our Positive Outlooks (Costa Rica, Dominican Republic, Guatemala) and Negative Outlook (Colombia).

“Latin America Fiscal Recoveries Expected in 2025 After Slippage in 2024” is available via the link above or at

Contact:

Todd Martinez
Senior Director
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Javier Alfaro
Analyst
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