Risk Map

Country risk

Companies that do business internationally rely on the stability of the business environment in the foreign country. Profits and investments can be vulnerable to adverse developments in this environment. These risks are broadly termed ‘country risk’. The level and change in country risk is, therefore, an important strategic and operational indicator for international companies.

Country risk covers a wide range of factors such as political developments, the risk of (armed) conflict and sovereign financial situation. These factors relate, for example, to regulatory changes, the risk of confiscation, civil unrest, war, currency controls and devaluations. Country risk takes into account a sovereign’s willingness and ability to pay and the impact of this on the ability of public or private entities to meet their cross-border payment obligations. Under our political risk cover contract, we provide cover against a subset of ‘country risk’ events. If you would like to learn more information about an individual market and their STAR rating, see our Country Reports. 
 

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Movement Focus
 

2024 Q3

Argentina: Bold policy actions under the new president have helped stabilize the Argentinian economy and grow official reserves. But these improvements are from very low levels: official reserves are still insufficient, macroeconomic imbalances remain sizeable and a long and difficult adjustment process lies ahead.

Bolivia: Country risk in Bolivia is increasing as the sovereign is running out of options to finance its wide fiscal deficits. Dollar shortages have already resulted in informal currency restrictions and payment delays. The risk of a disorderly devaluation of the overvalued currency has further increased.

2024 Q2

Egypt: With the re-anchoring of a new financial program, Egypt’s growth prospects are improving in the coming years. Balance of payments problems are no longer acute due to a flood of financial aid. Reform progress has resumed including renewed exchange rate flexibility.

Saudi Arabia: Hydrocarbons production will remain the mainstay of the Saudi economy in the medium term but the Vision 2030 economic diversification strategy is driving infrastructure development and stronger GDP growth prospects. Saudi Arabia also benefits from strong external buffers and capacity to withstand another oil price drop. 

Panama: Panama’s risk profile has deteriorated due to persistent fiscal pressures exacerbated by uncertain consolidation prospects and higher US interest rates. The economy remains resilient, underpinned by a well-developed financial system and manageable government and external finances. Full dollarization limits transfer & convertibility risk. 

2024 Q1

Dominican Republic: The Dominican Republic has been one of the fastest growing economies in Latin America since 2010 and its GDP per capita is among the highest in the Caribbean. On top of this, the economy benefits from diversified exports, declining public debt, and strong social and governance indicators, all contributing to an improving country risk profile.

Mozambique: Mozambique has been upgraded within the moderate-high risk category as an IMF program and improving relations with external donors improves the outlook for its weak government finances. The expected restarting og LNG production should accelerate economic growth in the coming years. 

Cameroon: Political risks are rising in Cameroon as widespread popular discontent and entrenched political divisions and rivalries compound the risk of a disorderly power transition in 2025. Concerns about Cameroon's debt management capacity persist following several delayed payments under a now-resolved external commercial loan. 

2023 Q4

Costa Rica: Costa Rica has moved into the moderate risk category, reflecting the structural improvement of government finances following strict fiscal consolidation and sustained access to financing. The exchange rate has become more flexible and official reserves have strengthened, reducing transfer & convertibility risks.

The Gambia: The Gambia’s economic outlook is positive, driven by a recovery in the tourism sector, fuelling greater investments in construction and infrastructure. We expect a successor IMF program to begin this year, further improving public finances and boosting the growth outlook though the risk of social unrest persists.

Niger: Niger’s economy is struggling under stringent international sanctions imposed following the military coup last July. There’s still no roadmap for an acceptable power transition, preventing the disbursement of IMF funds, increasing economic distress and security risks.

2023 Q3

Gabon: Political uncertainty is high following the military coup in August that ousted the long-standing president, Bongo, and could cause the security situation to deteriorate. The shock is also detrimental to economic growth and investment in Gabon’s oil-dependent economy.

UAE: The political and economic situations in the UAE have been stable and the growth outlook remains robust. The UAE favours a balanced approach to diversifying and greening its economy which is positive for foreign trade and investment, while also contributing to steady improvements in public finances.

Bolivia: The risk of dollar shortages and a disorderly devaluation of Bolivia’s overvalued exchange rate are very high. International reserves are declining from already low levels and the government has resorted to borrowing from multilaterals and the central bank to selling gold, in order to support the fixed exchange rate.

 

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The Atradius STAR rating

STAR is the Atradius in-house political risk rating. STAR stands for Sovereign Transfer and Arbitrary Risk and represents a rating system for assessing country risk. The STAR rating is a summary measure of political risk relevant to the Atradius trade credit insurance contract and explicitly targets the impact on public or private entities with cross-border payment obligations.

Broadly speaking, the default triggers under an Atradius Political Risk Policy are classed as either Sovereign Transfer or Arbitrary Risk.

The STAR rating runs on a scale from 1 to 10, where 1 represents the lowest risk and 10 the highest risk. The 10 rating steps are aggregated into five broad categories to allow their interpretation in terms of credit quality. Starting from the most benign part of the quality spectrum, these categories range from ‘Low Risk’ to ‘Very High Risk’.
 

Download STAR Rating Background Information

 

Disclaimer:

This map is provided for information purposes only and is not intended as a recommendation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in this report has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is accurate to our best knowledge and belief at time of publication but it does not aim to predict future developments. All information in this report is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in this report or for any consequential, special or similar damages, even if advised of the possibility of such damages.