Fitch upgrades Argentina to 'B-' on Milei's economic reforms

May 5 (Reuters) - Global ratings agency Fitch on Tuesday upgraded Argentina's long-term foreign currency and local currency issuer default rating to "B-" from "CCC+", with a stable outlook.

-- Fitch cited "improved fiscal and external balances, progress on economic reforms, improved prospects for FX reserve accumulation" and its expectation that its government will secure financing to cover its debt obligations.

-- It noted that vulnerabilities persist due to weak international reserves, high inflation and a history of macroeconomic instability.

-- Fitch said it expected economic growth to moderate to 3.2% in 2026.

-- The credit agency pointed to stronger political backing for President Javier Milei following the October 2025 midterm elections.

-- The October election win enabled the government to advance structural reforms, including a labor program that extended the working day and legislation to ease mining restrictions in regions with glaciers.

'A KEY THRESHOLD'

-- "With this move, Argentina has crossed a key threshold in international markets," said Argentina's Political Economy Secretary Jose Luis Daza in a post on X.

-- "Thousands of institutional funds are currently unable to invest in CCC-rated instruments. Now they will be able to invest in Argentine bonds," he added.

-- Milei has made conserving fiscal balance a cornerstone of his administration and vetoed laws he considers a risk to this, drawing ire from social sectors that have seen their budgets slashed under his government.

-- Inflation, although down from peak levels, has proven sticky in recent months due to exchange-rate depreciation and rising utility prices. Economic growth remains uneven, concentrated in energy, mining and agriculture.

(Reporting by Aatrayee Chatterjee, Sarah Morland and Cassandra Garisson, Editing by Daina Beth Solomon)