Fitch lowers Aruba

Fitch Ratings said downgraded Aruba’s long-term foreign- and local-currency issuer default ratings to BBB- from BBB.

Fitch also said it downgraded the issue ratings on Aruba’s senior unsecured foreign- and local-currency bonds to BBB- from BBB.

The outlook was revised to stable from negative.

The agency also said it downgraded Aruba’s country ceiling to BBB from A- and affirmed the short-term foreign-currency issuer default rating at F3.

Aruba’s downgrade and stable outlook reflect its sovereign creditworthiness, which deteriorated since 2009 due to the negative impact of recurrent suspensions of operations at the Valero refinery on growth, investment and foreign reserves, Fitch said.

This highlights the island’s narrow economic structure and vulnerability to external shocks, the agency said.

The focus of the fiscal stimulus response on selective tax cuts, expanding government payroll and increasing future commitments on public-private partnership projects has accentuated budgetary rigidities and increased the challenges to reduce Aruba’s large fiscal imbalances and rising public debt burden, Fitch said.

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