S&P Global Ratings on Aug. 6 changed its outlook on Aruba to stable from negative, saying that it expects the island country to continue advancing its fiscal correction program during the next two years.
The rating agency also expects the country to stabilize the trajectory of government debt, with slowly strengthening prosperity in Aruba forecast to boost the economy's resilience and aid further fiscal consolidation.
Aruba's credit strengths include its strong relationship with the Netherlands, solid domestic public institutions and a sturdy external asset position.
However, these strengths are balanced by the country's weak record of GDP growth, its heavy reliance on tourism and its limited monetary flexibility, which arises from its long-standing currency peg with the U.S. dollar, S&P said.
The rating agency estimates that Aruba's economy will expand by 0.9% on average during the next three years, down from 2% in 2017, as structural challenges will probably continue to hamper growth.
S&P affirmed the country's long- and short-term sovereign credit ratings at BBB+/A-2 and its transfer and convertibility assessment at BBB+.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.