By Nelson Bocanegra
BOGOTA, Oct 26 (Reuters) - Colombia and Chile should adopt additional measures to tighten fiscal deficits as their debts are likely to remain high with increasing political uncertainty, an executive with Fitch Ratings said on Tuesday.
"We don't see a near-term path for (debt) stabilization in Colombia, we don't see debt stabilizing in Chile," said Richard Francis, a senior director at Fitch, at a conference organized by the ratings agency.
Since the pandemic began, Fitch has downgraded both countries as well as Peru, with Colombia being the hardest hit as it lost its investment grade.
"Both countries are going to have to do more if they want to reduce their deficits and stabilize the debt," Francis said, who expects both countries will require fiscal reforms to increase tax revenue.
Colombia has already implemented a tax reform meant to increase revenue by $4 billion, but Francis noted that the country's debt remained high.
Political risk in the region is rising. Chile and Colombia will host presidential elections this year and next, while Peru elected socialist Pedro Castillo in June.
While campaigning in Peru, Castillo pushed to redraft the country's market-friendly constitution, but has since softened his stance saying this is not a priority.
Kelli Bisset-Tom, a director at Fitch, said the ratings agency is not currently including constitutional change into the risk factors affecting Peru.
But that risk is highly present in Chile, where an assembly has been formed to rewrite the constitution.
"The biggest risk in Chile is coming from the constitutional assembly process," Francis said, noting that the uncertainty comes from what higher spending could be baked into the new document.
He added that Fitch was confident that elections in Colombia next year will not lead to radical changes in the economic framework, even if left-wing candidate Gustavo Petro were to succeed.
"We do not expect a change in economic framework, he said. "We think there are checks and balances, no matter who wins." (Reporting by Marcelo Rochabrun; Editing by Richard Chang)