LatinNews Daily - 23 September 2024

*The credit ratings agency Moody’s has raised its outlook on Peru from negative to stable, while leaving the country’s long-term foreign currency and local issuer credit rating unchanged at Baa1. The improved outlook reflects Moody’s assessment that “the adoption of political reforms alleviates medium-term concerns about institutional stability that could have durably weighed on governability.” Central to this re-evaluation was a constitutional reform approved in March this year which will see Peru return to a bicameral legislative system in the next general elections, scheduled for 2026. The new senate, Moody’s said, “will be more likely to quell initiatives that are potentially controversial and/or detrimental to the country’s fiscal and economic health.” Moody’s predicted that the reform will also “help stabilise the balance of power between the executive and the legislature that has deteriorated significantly since 2017 and led to multiple presidents being removed from office, dismissals of congress by the executive branch and overall intense political volatility that has negatively affected sentiment and economic performance.” Moody’s also highlighted that the reform will enable the re-election of legislators from 2026. Whilst unpopular with the public, Moody’s said that this change will address the problems caused by “a much more volatile congress with inexperienced legislators”.