(Reuters) – Fitch Ratings on Thursday revised Peru’s outlook to negative from stable, saying a deterioration in political stability and government effectiveness has increased downside risks to the country’s ratings.
It affirmed Peru’s long-term foreign currency issuer default rating at “BBB.”
Fitch said it expects the weakening of Peru’s political governance institutions will be difficult to reverse before the end of 2024, adding that “weaker governance poses greater downside risks to investment and economic growth” than the agency had expected earlier this year.
Peru’s weakened investment and economic prospects, if sustained over 2023-2024, could undermine its macro and fiscal trajectory in comparison to its “BBB” peers, Fitch added.
The agency added that the country’s high Cabinet turnover and two failed impeachment attempts have sustained “political tumult.”
Last week, Peru’s attorney general filed a constitutional complaint against President Pedro Castillo over “indications of a criminal organization” in his government.
Castillo, who already faces five criminal investigations, called the complaint a “coup d’etat.”
(Reporting by Carolina Pulice in Mexico City; Editing by Anthony Esposito and Matthew Lewis)
