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IIF LatAm Views: Where the Missing Fiscal Anchor Gets Paid For

Jonathan Fortun · Martín Castellano · María Paola Figueroa / Institute of International Finance

Fiscal credibility shapes borrowing costs through different channels across Latin America. Jonathan Fortun, Martín Castellano and María Paola Figueroa contrast Brazil’s high domestic financing costs with Mexico’s sovereign repricing ahead of a rating downgrade. In Colombia, lower spreads already reflect expectations of political and fiscal improvement, leaving the country exposed if those expectations are not met. The comparison places institutional strength and credibility alongside debt levels when assessing sovereign risk.