Uruguay is the lowest risk economy in the region

The president of the Uruguayan Accreditation Agency (OAU), Washington Corallo, made a post on Twitter where he shared a table showing the country risk of the Latin American economies of JP Morgan Chase, who made a comparative chart in order from highest to lowest.

In the image, Uruguay appears at the bottom of the list, which means that it is the country with the lowest economic risk in the region. Since March 30, 2022, it has 125 basis points, surpassing the rest of Latin American economies. As the lowest risk is measured by the lowest values, Uruguay also surpassed the regional average, with 381 points, and the world average, with 382 points.

The indicator refers to the risks inherent in each country's investments and financing, as opposed to others. Under the official name of EMBI (Emerging Market Bond Index), it is one of the main indicators of country risk worldwide, calculated specifically by JP Morgan Chase.

It measures the difference between the interest rate paid by US Treasuries and the bonds issued by a country. In other words, it is the “surtax” you pay for a bond in the United States.

With a low country risk, “it is easier to attract foreign investment” and “generate more and better jobs,” Corallo said. Uruguayan professionals also estimate that the score will continue to fall due to the result of the referendum in which they won the “No” vote to repeal 135 articles of the Urgent Consideration Law, the flagship law of Uruguayan President Lacalle Pou.

In this way, the podium of the countries with low-risk economies in the region is won, in addition to Uruguay, Chile with 157 basis points and Panama with 175 basis points. On the other side of the graph, there are countries with a very high risk such as Argentina, with a country risk of 1,729 points, and El Salvador, with 1,771. The last place is Venezuela, which exceeds 37 million points and becomes the worst country to invest because of its return risk.

The Latin American classification is completed by Honduras, with 461; Bolivia, with 438; Costa Rica, with 427; the Dominican Republic, with 398; Mexico, with 344, Colombia, with 329; Brazil, with 277; Guatemala, with 260; Paraguay, with 238, and Peru, with 194.

According to other indicators, such as the bulletin of the Electronic Stock Exchange, on April 7, the country risk index fell by two basis points, leaving at the close of operations at 99 points.

On the other hand, as early as February 2022 Uruguay had displaced Chile, becoming the safest country in terms of debt in the region. The improvement came “thanks to its new fiscal measures,” said La Tercera. The Credit Default Swap (CDS, insurance against defaults) gave Uruguay 77.57 points, indicating that the country continued its downward trend since the beginning of that month. It started February with 106 points and, at the end of it, it came in first place in the ranking.

Within indicators of that date, the EMBI also appears. In that month, he installed Uruguay as the leader with 136 points, 33 less than Chile who ranked at 169 points. Both countries scored better than the regional average, which was 406 points.

The change in Uruguay “comes in the midst of a process of fiscal consolidation and the improvement of all fiscal institutions carried out by the government of President Luis Lacalle,” said the Chilean newspaper. In addition, he recalled that in December the agency Fitch improved Uruguay's credit rating outlook from “negative” to “stable”, keeping the rating at “BBB-”.

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