The international rating agency Moody’s published this Monday its annual credit analysis report of the Dominican Republic in which it highlights the sovereign rating of Ba3 and its stable outlook, which was ratified last April.
The firm emphasized the Dominican economy’s real growth of 12.3% in 2021, a level that was “significantly above regional and risk rating peers”, according to the annual credit analysis released.
The agency estimates that in the medium term economic growth will average around 5%, and also expects balance of payments and government liquidity risks to remain under control.
Moody’s noted that the Dominican Republic demonstrated flexibility in access to financing that was not interrupted during the pandemic. Furthermore, it highlighted that this favorable access is maintained in comparison with its regional peers, even in the current situation in international markets due to the conflict between Russia and Ukraine.
He mentioned that the Dominican government managed to decrease the debt ratio as a percentage of gross domestic product (GDP), which went from 58% in 2020 to 51% at the end of 2021, showing an improvement above the level recorded by the average of peer countries with Ba rating.
Moody’s expects debt to decline to around 49% of GDP by 2022, basing its predictions on the fiscal deficit remaining below debt stabilization levels in the coming years.
The firm’s rating is based on economic, fiscal, institutional and governance strength, as well as the country’s resilience to risk events. Based on its expectations, the stable credit is consistent with the balance of risks that sustain our sovereign debt.
The rating agency, which recognized the importance of the tourism sector in the local economy, highlighted that the Dominican Republic is less dependent on that activity when compared to other similar countries in the region or dependent on tourism, and that this prevented a more marked economic contraction in 2020, while serving as support for a rapid recovery in 2021.
“The World Travel & Tourism Council estimates that the sector’s total contribution to output is 16% of GDP, below the 25% of GDP average contribution the sector has for its Caribbean peers,” the document states.