Moody’s Investors Service changed its ratings outlook to positive for the Dominican Republic’s foreign-currency ceiling for bonds and notes, as well as the ceiling for bank deposits. Moody’s indicated that the positive outlook is supported by a period of sustained economic growth where GDP has grown on average 7.5% since 1996. Additionally, single-digit inflation contributed to the stability. The ratings agency noted that debt burden indicators have fallen significantly during the last five years. The debt-to-exports ratio has declined to 41% from 69%. Medium-term export prospects should benefit from the US decision to grant NAFTA Parity to textile products coming from the Dominican Republic, a condition that will allow those products to enter the US market at duties similar to those already enjoyed by Mexico under NAFTA. According to Moody’s, the intention of the new administration to carry out tax and tariffs reforms represents a positive development as well. In addition, the rating agency noted that changes undertaken since last year may represent an improvement not only in the country’s ability but also its willingness to repay creditors on a timely basis. Moody’s said that while the economy is currently confronting a period of weaker growth, strong economic fundamentals should allow it to overcome the short-term downturn in the business cycle.
