The credit rating agency Standard & Poor’s (S&P Global) informed Thursday that the Dominican Republic’s credit outlook was upgraded from negative to stable due to “an impressive economic recovery” that has reversed the external deterioration caused by COVID-19.
Standard & Poor’s highlights in its December 2 report that this improvement is a sign of the dynamism of the Dominican economy, compared to its peers with similar levels of development.
In addition, it points out that the evolution of the tourism sector is progressing much faster than expected, which is supported by the strong vaccination campaign against COVID-19. “That progress is evidenced by the growth in visitor arrivals to the country, which already exceed the levels recorded in 2019, prior to the pandemic,” the Ministry of Finance said in the note reporting the rating change.
The agency estimates a favorable economic growth and the continuity of public policies for the next 12 to 18 months. In such a way, the base scenario that the rating agency manages for next year is that the gross domestic product (GDP) will grow by 6% and around 5% for the following years, driven by private sector investment.
“This great news evidences the effort that has been made for prudent fiscal management, maintaining the focus on improving the quality of life of Dominicans,” said Finance Minister Jochi Vicente.
Another factor underpinning Standard & Poor’s decision to upgrade the credit risk outlook “is the solid fiscal consolidation achieved by the Dominican government in 2021, following the sharp increase in the fiscal deficit and debt levels last year.”
Regarding debt management, the rating firm highlights the liability management operations, both in the local and foreign markets, for a total of US$2.4 billion with maturities between 2021 and 2027. They also highlight the results of these operations in the reduction of fiscal pressure, through a reduction in the weight of interest on revenues in 2021. In this regard, the Deputy Minister of Public Credit, María José Martínez, said that this is evidence of the proactive management of the public debt that the Dominican government has implemented.
In its report Standard & Poor’s highlights the structural reforms carried out by the government of President Luis Abinader in cases such as the electricity, police and judicial sectors, among others, in which important progress has been made.