The renowned credit agency Fitch Ratings confirmed this Thursday the risk rating of the Dominican Republic in BB-with a positive outlookhighlighting the strength of his economyadvances in governance and the potential to implement reforms that strengthen the country’s macroeconomic and institutional framework.
According to Fitch, this rating is supported by the strong track record of economic growtha diversified export structure, a gross domestic product (GDP) per capita high and favorable performance in indicators of governancewhich position the country above many of its regional peers.
He Treasury announced the agency’s assessment in a statement, which also highlighted that the rating agency took into account the rate reduction of the monetary policy established by the Central Bank of the Dominican Republic (BCRD).
Among the highlights, the report mentions the approval of the Fiscal Responsibility Lawwhich introduces a fiscal rule limiting real spending growth to 3% annually (7% in nominal terms) and establishes a debt anchor at a 40% of GDP by 2035. This measure seeks to guarantee long-term fiscal sustainability and strengthen confidence in economic policy.
Fitch also highlights the gradual reduction of external debt in foreign currencywhich decreased to 67% in September 2024reaching levels similar to those of 2019 and improving from the 69% recorded at the end of 2023. According to the report, this improvement reflects an increase in the issuance of global bonds denominated in pesos, contributing to the country’s financial stability.
Regarding monetary policy, Fitch highlights the reduction of the monetary policy rate by the BCRD, which went from 8.5% in May 2023 to 6.25%. This has allowed the economic environment to be stabilized, while average inflation until October 2024 stood at 3.33%below the target range of 4%.
The report also highlights that the economic growth of the country has resumed its historical rhythm, with an expansion of 5.1% in the first half of 2024after the slowdown in 2023, when growth fell to 2.3% due to high interest rates. The sectors of free zones and tourism continue to be fundamental pillars of the economyhighlighting the tourism with record levels in visitor arrivals, confirming the resilience of these key areas for national development.
Looking ahead, Fitch projects a economic growth of the 5% for 2024 and 2025driven by a historic level of foreign direct investment (FDI)particularly in the sectors of tourism and energy, which reinforces the prospects for sustainable growth in the medium term.
