Sovereign debt risks across Latin America have eased in the past year or so but there are still important nuances at a country level. Public finance risks in Brazil and Colombia are most concerning given wide budget deficits and no clear willingness on behalf of policymakers to push through the austerity needed to stabilise high public debt burdens. Meanwhile, although we’ve become more optimistic on Argentina, the peso’s overvaluation is a worry for debt sustainability in the future.
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