Q24N – Debt ratios in Latin America’s largest countries are unlikely to return to pre-2020 levels in the next 18 months, Moody’s Investors Service said on Wednesday.
The growth of sovereign debt is coinciding with rapidly rising interest rates around the world, making refinancing increasingly unaffordable.
The interest cost of debt, measured as the ratio of general government interest payments to revenue, will continue to comprise a larger proportion of government budgets than before the pandemic.
Furthermore, as Latin American sovereigns divert fiscal resources to debt and interest payments rather than to infrastructure investments and other productivity-enhancing projects, this will weigh on economic growth prospects.
The ratings agency added that corporate indebtedness will remain low despite inflation and political stress.