S&P lifts Aruba to positive

S&P said it revised the outlook on Aruba to positive from stable.

The agency also said it affirmed Aruba’s BBB+ long-term and A-2 short-term sovereign credit ratings and its transfer and convertibility assessment at BBB+.

The outlook revision reflects the agreement between Aruba and Citgo to reopen Aruba’s refinery, S&P explained.

Uncertainty about Citgo’s capacity to have the refinery working in the planned timeframe continues to weigh on the ratings, but the agency said if the refinery reopens, the country can expect stronger foreign direct investment inflows to bolster GDP growth.

Faster growth, coupled with Aruba’s fiscal agreement with the Netherlands, could result in fiscal consolidation and debt decreasing faster than expected, S&P added.

The ratings also reflect the island’s stable political system based on parliamentary democracy, its status as a member of the Kingdom of the Netherlands and its relatively high $25,000 per capita GDP, the agency said.

The ratings are constrained by its narrow, open economy, which is highly dependent on tourism and its limited monetary flexibility due to its fixed exchange rate, S&P said.

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