2017.08.1717:11:00UTC+00ARGENTINA: Primary Election Results Support Macri Reforms - Moody's

Moody's Investors Service said that the results obtained by the Cambiemos ruling coalition in Argentina's primary elections improved its performance when compared to the 2015 elections and, if repeated in the final elections in October, the government would retain more chairs in Congress.

Cambiemos' victory on Sunday provides the government with strong political support to move ahead with political reforms that would be positive credit for Argentina's sovereign rating, Moody's said.

Last Sunday, Argentina held primary legislative elections. Cambiemos coalition has won 36% of the total vote for the lower house of Congress.

According to the Moody's report, in the first 20 months in office, Macri's administration has drastically changed Argentina's positions, liberalizing the exchange market, fighting inflation as a priority, raising the electric energy tariffs and returning to the international capital markets.

"We believe these changes are positive in credit," the agency stated. However, it noted that an economic downturn last year increased the risk that the changes promised by the government would be at risk, stagnating the reform agenda.

The government plans to promote several important legislative initiatives next year, including tax, labor and pension reforms.

"Political resistance to these reforms has been strong in the past. A stronger presence in Congress would strengthen Cambiemos' negotiating power and its ability to pass legislation," Moody's noted.