Caricris Reaffirms ‘Adequate Creditworthiness’ Ratings of the Government of Saint Lucia

• Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the Issuer/Sovereign Credit Ratings assigned to the Government of Saint Lucia (GOSL or the Country) at CariBBB- (Foreign and Local Currency Ratings) on the regional rating scale for several rated debt issues of the country.
• These ratings indicate that the level of creditworthiness of this obligor, adjudged in relation to other obligors in the Caribbean, is adequate.
• CariCRIS has also maintained a stable outlook given that the country’s is expected to see modest real GDP growth over the next three years and its Debt-to-GDP, currently above 70%, is not expected to increase significantly. Alongside GDP growth, planned surpluses should help reduce indebtedness to 60% by 2035. Financial system metrics remain strong, and international reserves have improved from 2.9 months of import cover in 2022 to 4.4 months in 2024 due to recovering tourism earnings.
• The ratings are driven by monetary and exchange rate stability due to a quasi-currency board arrangement, a sound financial sector characterised by high but declining NPL ratios and wide economic activity, albeit dependent on tourism.
• The rating strengths are tempered by the projected debt-to-GDP ratio, which is expected to remain above 60%, necessitating fiscal consolidation and sustained GDP growth. It also considered high unemployment, particularly among youth, and rising crime, which can lead to political upheaval and disrupt fiscal and investment planning..
• Factors that could, individually or collectively, lead to an improvement in the Ratings and/or Outlook include debt-to-GDP below 65%, a balanced budget, and sustained 5% annual GDP growth. Conversely, a fiscal deficit above 15% of GDP or debt-to-GDP exceeding 90% alongside weaker debt servicing capacity could, individually or collectively, lead to a lower rating and/or Outlook.

(Source: CariCris)