Regional ratings agency CariCRIS recently lowered the assigned ratings of several debt programmes of the Government of Saint Lucia (GOSL) to CariBBB- (foreign and local currency).
“The downgrade is driven by the projected increase in the fiscal deficit and debt to GDP which put the GOSL outside of its previous rating category’s risk parameters,” a section of a release stated.
“The ratings on GOSL continue to reflect: its monetary and exchange rate stability, underpinned by membership in a quasi-currency board arrangement; a relatively diversified economic base; and the sovereign’s sound financial sector,” it continued.
CariCRIS further explained that the country’s rating strengths are tempered by the worsened fiscal position and significantly increased indebtedness that are effects of the COVID-19 pandemic. Moreover, the agency cited demands on St Lucia’s international reserves, due to the loss of tourism earnings, as another reason for the downgrade.
Notwithstanding, CariCRIS maintains a stable outlook on the ratings based on projections of a return to growth in 2021, with positive impacts for fiscal revenues, financial sector soundness and foreign currency earnings.