Aruba rating downgraded to BBB by S&P, outlook stable
ECONOMYNEXT – Standard and Poor’s has downgraded Aruba’s sovereign rating from to BBB from BBB+, with a stable outlook as tourism was badly hit amid a Coronavirus pandemic.
In our opinion, Aruba has the most exposure to tourism among the sovereigns we rate,” Standard and Poor’s said in a March 15 statement.
“We “expect the severe hit to the country’s economy by the COVID-19 pandemic and its aftermath will be more prolonged than we had anticipated.
“We also expect the government will rely more heavily on borrowing to fund its expenditures, pushing debt levels higher.”
The outlook was stable.
“The stable outlook considers the economic and fiscal challenges the country faces, alongside the support afforded by the country package agreement reached between Aruba and the Netherlands in late 2020,” the rating agency said.
“The agreement underscores the Netherlands’ strong commitment to provide concessionary financial assistance to Aruba, while laying the groundwork for reforms and aiming to limit the severity of the effects of the pandemic.”
Aruba’s rating could be further downgrade over the next two years if budget reforms agreed with the Netherlands are not done. It could be raised if the recovery exceeds S&P expectations. (Colombo/Mar/2021)