The Risk Qualifying Agency Moody´s Ratings has improved the Credit evaluation of the Dominican Republicraising it from “ba3” to “ba2” with stable perspective. This note (first raised since 2017) highlights the macroeconomic strength of the country and its progress in institutional matters, but will depend on a economic growth sustained and a greater reduction in external debt to stay.
According to the report published this Friday, Moody´s It emphasizes that the Dominican economy has maintained a Growth rate average of 5 % annual during the last 15 years, as a result of a stable economy With diverse productive segments and applied reforms, highlighting above all the strengthening of government institutions after the Covid-19 pandemic and facing an “active civil society.”
However, he acknowledges that the country is “in a weak fiscal position“Compared to their peers in the region, and face”Credit challenges persistent “, related to a limited income base and high exposure of foreign currency indebtedness, in the absence of significant reforms To increase collections.
Values stability and levels of foreign investment
One of the aspects valued to increase the qualification to Dominican Republic It was his “high political stability”, especially when compared to countries with BA rating, a factor that helps him attract, in a sustained way, high levels of foreign investment direct.
“These factors support the currency reserves of the country, which remain at historically high levels, strengthening its external position and limiting its vulnerability to risk events, “he adds.
The agency also stands out Improvements in Public Administrationreflected in a greater capacity of Fiscal planningprudent debt management and a political cohesion and social that contrasts with the high polarization observed in other countries of the region.
Fiscal deficit
The agency provides for a Fiscal deficit of the general government of around 3.2 % of GDP In 2025, and approximately 3.0 % in the following years, resulting in the Debt load stabilization around 48 % compared to GDP for the next two years.
“However, with income Government equivalent to 16 % of GDPthe collection is among the lowest with BA rating (with a median of 28 %), “he observed.
- To this adds that, only in 2024, the interest payments They represented 21 % of government revenues, and about 66 % of the debt is called foreign currency.
“Facing the future, although we hope that the government gives priority to Debt emissions in local currency and adopt administrative measures to gradually improve the collection and reduce tax evasiontogether with deeper income reforms, the affordability of the debt is likely to remain significantly weaker than that of its peers, which will limit the rating at the BA2 level in the short and medium term, “he warned.
What could vary?
Maintain or improve this qualification will depend on whether debt affordability It increases, while the Exposure to foreign currency decreases.
“A greater capacity to pay the debt, backed by a Income increase of government through Tax reforms Wide would improve the fiscal position from the country and its sovereign credit profile in general, “he says.
On the contrary, if the economic growth turns out to be weaker than what is expected in a sustained way, if economic perspectives They deteriorate significantly, or if the authorities deviate from their plans Fiscal consolidation In the long term, this credit note could face down tensions.
“A weakening of External accountswith a persistent increase in current account deficit or a sustained fall of the Foreign currency reservationsthey would also exert down pressure on the sovereign credit profile, “Moody´s concluded.
