Colombian voters' rejectionof a proposed peace deal over the weekend could make it more difficult for the countryto move forward with economic reforms, Moody's reportedly said.
The rating agency called the referendum results — in which 50.2% voted against a peace agreementwith the Revolutionary Armed Forces of Colombia, or FARC — a credit negative forColombia, saying that the results could "undermine the government's abilityto pass other reforms," according to Reuters.
The Moody's comment counters an earlier statement from FitchRatings that predicted the failed vote would not impact the government's abilityto "implement a consistent and credible policy response to address economicchallenges." Fitch said it still expects Colombian President Juan Manuel Santosto garner congressional approval for tax reforms by the end of the year — a measurethat is seen as crucial to compensate for Colombia's lower of oil revenues.
The vote, which surprised many given that polls had suggestedan easy victory for the referendum, joltedmarkets in Colombia on Oct. 3, with the Colombian peso dropping about 2% againstthe U.S. dollar and the benchmark COLCAP market index falling 1.2%. Reuters citedanalysts from JPMorgan as asserting that the market could already be pricing ina possible downgrade of Colombia's BBB credit rating.
In an effort to salvage the FARC peace agreement, which cameafter years of negotiation, President Santos said on Oct. 3 that he will form acommittee to negotiate with opponents of the peace deal. The committee, composed of government representatives,will meet with the politicians who ardently disapproved of the peace deal, includingmembers of the Democratic Center, the party of former President Álvaro Uribe.
Santos said he is willing to sit down with the representativesfrom Democratic Center to "bring a happy ending to this peace process,"The Wall Street Journal reported.
In the meantime, both the government and the FARC rebels saida ceasefire would remain in place.