Fitch Ratings, a leading global rating agency, has reaffirmed the Dominican Republic’s long-term foreign-currency issuer default rating at ‘BB-‘ with a positive outlook, the Dominican Presidency reports. This upgrade reflects the country’s robust economic growth, improved governance indicators, and potential for further reforms to strengthen its macroeconomic framework.
According to Fitch, the Dominican Republic’s rating is supported by a history of robust economic growth, a diversified export structure, a high per capita gross domestic product (GDP), and favorable governance outcomes, which compare favorably to other countries in the region.
The rating agency also highlighted the recently approved Fiscal Responsibility Law, which establishes a fiscal rule limiting real government spending growth to 3% (7% in nominal terms) and anchors debt at 40% of GDP by 2035. This measure aims to ensure long-term fiscal sustainability and strengthen confidence in the country’s economic policy.
Fitch noted a gradual reduction in foreign-currency external debt, which fell to 67% in September 2024, similar to the 2019 level, compared to 69% at the end of 2023. “This improvement is the result of increased issuance of peso-denominated global bonds, contributing to the country’s financial stability,” the report emphasized.
The agency also highlighted the positive effects of the monetary policy adopted by the Central Bank, which involved reducing interest rates. The policy rate was lowered to 6.25%, compared to 8.5% in May 2023, reflecting a more balanced economic environment. Inflation, with an average rate of 3.33% until October 2024, remained below the target range of 4%.
Fitch highlighted that the country’s economic growth has resumed its historically robust pace, expanding by 5.1% in the first half of 2024, following a slowdown in 2023 (2.3%) caused mainly by the high-interest-rate environment. The free zones and tourism sectors remain the pillars of the economy, with the latter reaching record levels of visitor arrivals, confirming the resilience of these key areas for the country’s development.
In this context, Fitch projects economic growth of 5% in 2024 and 2025, supported by a historic level of foreign direct investment (FDI), especially in the tourism and energy sectors, suggesting solid medium-term growth prospects.
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Presidency
26 November 2024