Medium- to long-term political risk : Three countries upgraded

In the framework of its review of medium- to long-term (MLT) political risk, Credendo has upgraded three countries.

• Argentina:

Neoliberal President Milei took office two years ago, following an unorthodox Peronist government that had left the economy on the brink of collapse, severely derailed the IMF programme and triggered a currency crisis. Since then, Milei has largely stabilised the economy: annual inflation dropped from an eye-watering 211% end 2023 to 32% end 2025, while economic growth has rebounded strongly since 2025 after two years of recession. Milei’s biggest accomplishments, however, are on the fiscal front. He enacted the largest fiscal consolidation in over three decades, restoring primary surpluses from 2024 onwards. This fiscal consolidation, carried out under the first IMF programme to be successfully concluded in a decade, led to a sharp improvement in public debt ratios, bringing them down to a more sustainable level of 80% of GDP end-2025. Moreover, the strong performance of Milei’s party in the November 2025 midterm elections creates the political space needed to advance further fiscal reforms. In addition, thanks to fiscal consolidation and debt restructurings in recent years, solvency – an important driver of MLT political risk, which reflects a country’s ability to repay its external obligations in the long term – has improved significantly. That said, important challenges remain. Milei unwound the most distortive foreign exchange restrictions and implemented a large devaluation but stopped short of floating the exchange rate. Net foreign exchange reserves are still in negative territory, leaving the country highly vulnerable to another currency run, especially in the run-up to the 2027 presidential elections. In this context, the country’s MLT political risk rating has been upgraded to 6/7.

• Guinea:

Guinea had always been classified in the highest MLT political risk category 7/7 and has now been upgraded for the first time. Economic and financial indicators have structurally improved following the activation of large commodity investment projects. After decades of delays due to legal disputes, bribery scandals, corporate rivalries and political instability, the Simandou iron ore mining project finally started production and exports end 2025. This has improved Guinea’s economic growth outlook and should support the country’s strained liquidity levels. In addition to iron ore, bauxite and gold exports are also booming, although the terms of trade are currently being negatively affected by the tensions in the Middle East, as Guinea is a net fuel importer exposed to fuel shortages and the sharp increase in global energy prices. Coup leader General Mamady Doumbouya won the presidency in December 2025, but the exclusion of key political rivals from the electoral process and widespread repression raise concerns over democratic legitimacy and fuel civil anger. Although Guinea’s outlook is still subject to substantial political and institutional risks, its overall position no longer requires the highest risk rating.

• Kazakhstan:

Even though Kazakhstan has been hit by several external shocks in recent years – including Covid-19, the war in Ukraine and the ongoing Middle East conflict – it has maintained economic resilience. The country has relatively sound macroeconomic fundamentals, with solid public finances, a manageable current account deficit, subdued external debt and debt service. The economy also benefits from political stability. The main downside risks stem from the country’s high reliance on its key domestic oil industry, which is vulnerable to the war in Ukraine and Russia’s leverage, while also mitigating the impact of the current global energy shock. However, the expected acceleration of the Middle Corridor and bright economic prospects – in trade, infrastructure, critical minerals and energy diversification – notably boosted by stronger FDI from large and middle powers and deepening regional trade integration, should partly offset these risks. In this context, the country’s MLT political risk rating has been upgraded to 4/7.