29-07-2021 Latin American Weekly Report
Castillo inaugurated without cabinet in Peru
On 19 May, international credit ratings agency Standard and Poor’s (S&P) announced that it had downgraded Colombia’s credit rating from ‘BBB-’ to ‘BB+’, placing it below investment grade for the first time in over ten years. The BB category, otherwise known as ‘speculative’, or ‘junk’ grade, is applied to countries where economic uncertainty is expected to have an impact on the ability to meet future financial obligations. The explanatory note accompanying the decision by S&P highlighted as a cause the recent mass protests that resulted in President Iván Duque withdrawing a tax reform bill that would have increased the tax burden the tax burden on the general population. Whilst not unexpected, the downgrading is another blow to an embattled government, and will increase the costs of borrowing at a time when much of the country needs government support due to the economic upheaval produced by the coronavirus (Covid-19) pandemic.
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