Moody’s Keeps Barbados at B2 with Stable Outlook as Debt Falls to About 96% of GDP

• Moody’s Ratings has completed a periodic review of the ratings of Barbados, keeping the sovereign’s B2 rating with a stable outlook after a rating committee held on September 17, 2026.
• Barbados’ credit profile continues to strengthen, supported by large primary surpluses, a declining government debt burden, improved market access and continued reform momentum under the Barbados Economic Recovery and Transformation (BERT) 2026 program and the new precautionary IMF Stand-By Arrangement (SBA). However, the improvement is not yet sufficiently broad-based or established to support a positive rating action at this review.
• Economic growth moderated in 2026 as tourism activity softened following the strong post-pandemic recovery. Real GDP growth slowed to 1.4% in the first half of 2026 from 2.8% in 2025, while stopover arrivals declined in the early part of the year. Nevertheless, visitor volumes remained above pre-pandemic levels, supporting tourism-related activity and foreign exchange earnings.
• The Government recorded a primary surplus of about 4.2% of GDP in FY2025/26, extending a multi-year record of surpluses above 4%, which helped reduce government debt to about 96% of GDP at end-March 2026, from above 100% previously. Debt is expected to fall to around 92% of GDP in FY2026/27 and roughly 75% by FY2030/31. The new 36-month precautionary IMF arrangement provides an additional policy anchor for fiscal discipline and for reforms to fiscal management, state-owned enterprises and resilience to natural disasters.
• Moody’s assessed Barbados’ economic strength at “ba2”^[1], balancing relatively high income levels and improved resilience against the economy’s very small scale, high openness and reliance on externally driven sectors. Institutions and governance strength was assessed at “ba1”, reflecting strong governance traditions and stronger fiscal institutions since 2019, partly offset by constrained administrative capacity and weak statistical systems.
• Fiscal strength was scored at “b2”, reflecting sustained debt reduction, stronger debt affordability and a lower share of foreign-currency debt, although the debt burden remains high. The country’s susceptibility to event risk was scored at “ba1”, reflecting exposure to external and climate-related shocks, balanced by adequate foreign exchange reserve buffers and renewed access to external capital markets.
• An upgrade could follow if continued fiscal consolidation and reforms reduce debt and improve affordability faster than expected, supported by stronger growth and competitiveness. Conversely, external shocks or weaker policy effectiveness that derail consolidation, reverse the debt trend or renew pressure on foreign-exchange reserves could prompt a downgrade.

(Source: Moody’s Ratings)

 

^[1] Moody’s scores each rating factor on a scale from “aaa” (strongest) to “ca” (weakest). Scores in the “ba” range sit just below investment grade and indicate speculative credit quality. Within that range, “ba1” is the highest score and “ba2” is the middle score. Barbados’ economic strength is therefore moderately weak, while its institutions and governance strength is one notch higher, just short of investment grade.