Fitch has affirmed its B+ with a positive outlook credit rating for Barbados, dashing the authorities’ previous hope that the country would have received an upgrade this year.
Minister of Finance Ryan Straughn, reacting to the international credit rating agency’s announcement on Monday, suggested yesterday that an upgrade would be on the cards were it not for the current challenging and uncertain international economic situation.
He also told the DAILY NATION that he would be meeting with officials from another credit rating agency, Standard & Poor’s, today, with discussions likely to also take place with Moody’s next month.
“I think with a different international environment, we would have gotten an upgrade but I think the fact that we have had the rating affirmed with a positive outlook bodes well for Barbados in the future,” the minister said shortly after officially opening the $60 million Fort Carlisle Residences On The Bay at Bay Street, St Michael.
“When you look at what is happening in international bond and capital markets and the geopolitical circumstances, the affirmation of the rating by Fitch is actually quite a very positive outcome.
Shielded from impacts
“We have been ensuring that Barbadians can be shielded from the worst impacts of the Iran war, and as we continue to do that, that’s part of the reason why we built buffers in the first place. So it is a demonstration that the policies that we’ve pursued is making sense not just for individuals but certainly for the rest of the macro economy.”
Straughn said the benefits of having an improved credit rating was positive not only for businesses and others seeking to raise financing, but ultimately would benefit “the average man out there”.
Using Fort Carlisle Residences as an example, he said: “Projects like these are financed by capital and, therefore, as we improve our credit quality, it means that when investors have to borrow money, that you want that money to be borrowed as cheaply as possible, so that they can execute the project and therefore, jobs are generated as a result of these credit ratings.
“In the past, when we were being downgraded, projects weren’t getting off the ground, so, therefore, people weren’t employed and the ecosystem wasn’t being built.”
Fitch said in its new rating action commentary on Barbados that the long-term foreign currency issuer default rating was maintained at B+ with a positive rating outlook because of “the expectation that continued fiscal discipline, including large primary surpluses, will improve fiscal metrics, particularly the still-high debt-to-GDP ratio”.
“Economic growth has slowed from recent highs but remains above historical levels, which provides additional support to fiscal consolidation. Barbados’ rating is supported by high GDP per capita, strong governance indicators and solid international reserves,” the rating agency stated.
“However, the economy’s small size and reliance on tourism leave it vulnerable to shocks, while limited fiscal resources constrain the Government’s ability to respond. Limited, though improving, domestic financing flexibility also constrains the rating.”
Among the “key rating drivers”, Fitch said that “Barbados’ fiscal metrics continue a multi-year improvement, reflecting a strong commitment to fiscal discipline”.
“The fiscal deficit narrowed to 0.2 per cent of GDP in the fiscal year ended March 2026 (fiscal year 25/26) from 0.8 per cent the prior year.
“Although Fitch expects a deterioration in fiscal year 26/27 to 0.9 per cent given economic weakness and an increase in expenditures, fiscal consolidation will resume in subsequent years. Barbados’ fiscal deficit compares favourably to the ‘B’ median of 3.3 per cent.”
High but shrinking
Fitch also reflected positively on the fact that Barbados’ public debt is “high but shrinking”, with the debt-to-GDP projected at 92.2 per cent in fiscal year 26/27.
“This is still high compared to peers – the ‘B’ median was 53 per cent in 2025 – but the progress is substantial, with debtto- GDP falling by around one-third of its peak of 134.6 per cent in fiscal year 17/18,” it noted.
It also observed that Barbados’ economic growth “has begun to plateau after several years of a post-pandemic-driven rebound” and is expecting growth “to settle around two per cent over the medium-term – well above the 2000-2019 average of around 0.6 per cent – with upside potential if some of the government’s ambitious plans to transform the economy, as outlined in the Barbados Economic Recovery and Transformation Plan 3.0 are successful”.
Regarding tourism, Fitch expects “modest growth to resume as source market diversification expands and new flight capacity comes online”.
It warned that external risks were high for Barbados including “economic cycles in the United States and United Kingdom that may shift tourism flows and hurricane risk.”
“The Government is focused on building resilience, including diversifying its tourism base and acquiring resources to address a potential hurricane. However, the growing tool-kit may still be insufficient in the event of a severe global economic shock or a large storm, particularly given the lack of fiscal headroom,” the agency stated. (SC)