Moody’s raises the Dominican Republic’s credit rating to Ba2

A statement indicates that the entity also revised its outlook from positive to stable, citing the country’s strong economic performance, productive diversification, and institutional progress.

Fundamentals of improvement

According to Moody’s, the Ba2 rating is supported by strong, sustained growth in gross domestic product, averaging nearly 5% annually over the past 15 years, and a significant increase in per capita income, driven by macroeconomic stability and the expansion of key sectors such as tourism, which has attracted high levels of investment.

The agency also highlighted the institutional strengthening since 2020, with constitutional, administrative, and fiscal reforms and a clearer legal framework for controlling public spending and the deficit.
Moody’s also highlighted the country’s political and social cohesion, which it asserts is superior to that of other countries with the same rating in the region.

Structural fiscal challenges

Despite the upgrade, Moody’s notes that the rating remains at a ceiling in the short and medium term due to structural fiscal constraints, such as low tax pressure (16% of GDP) and high exposure to foreign currency debt.

He added that in 2024, debt service consumed 21% of public revenues and that 66% of the debt was denominated in foreign currency.

Moody’s forecasts the fiscal deficit will reach 3.2% of GDP in 2025 and around 3% in subsequent years, which would stabilize public debt at around 48% of GDP.

However, he warns that without comprehensive tax reform, fiscal restrictions will continue to limit the country’s ability to pay, although he believes the rating could improve with increased tax revenue.