Fitch raises the Dominican Republic’s rating from BB to BB+

Santo Domingo.- Fitch Ratings recently upgraded the Dominican Republic’s outlook from “BB stable” to “BB positive,” recognizing significant institutional advancements and a consistent record of robust economic growth.

The credit rating agency underscored the Dominican government’s efforts in strengthening governance, including increased budget transparency, internal auditing enhancements, improvements in the judicial system, and political stability. Economically, Fitch praised the Dominican Republic’s diverse export structure, solid economic growth history, and high social indicators compared to its peers.

The Ministry of Finance attributed this positive shift to the institutional improvements made under President Luis Abinader’s administration and the effective economic management by fiscal and monetary authorities. The Abinader administration has shown notable progress in Global Governance Indicators, particularly in controlling corruption, government effectiveness, and the rule of law. The country has consistently improved in these areas, moving from the 42nd percentile in 2018 to the 51st in 2022.

Finance Minister Jochi Vicente highlighted the government’s continuous administrative improvements and stated that each step forward in credit rating brings the country closer to greater social development. Vicente expressed the government’s commitment to elevating the Dominican economy to Investment Grade status, despite various challenges.

Fitch Ratings projects that the Dominican Republic’s economy will return to its 5% growth potential in 2024-2025, driven by economic stimuli and robust foreign direct investment. The agency also noted the issuance of an external bond denominated in pesos last September, which helped reduce the foreign currency proportion in the public debt portfolio to 68%. Increased domestic market emissions have complemented this improvement.

Vice Minister of Public Credit María José Martínez highlighted that the growth projections by Fitch Ratings for the upcoming years could position the Dominican Republic above regional nations and states with a BBB rating, moving closer to Investment Grade.

Additionally, Fitch Ratings acknowledged the country’s effective handling of inflation, allowing the Central Bank to reduce its monetary policy rate by 125 basis points, from 8.50% to 7.25%. This update from Fitch Ratings follows Moody’s improvement of the Dominican Republic’s outlook in August, from Ba3 stable to Ba3 positive, citing efficient and proactive public debt management by the current government.