August 04, 2025
The credit rating agency Moody’s Ratings announced yesterday that it has raised the Dominican Republic’s sovereign rating from Ba3 to Ba2 for both local and foreign currency debt.
In a statement, the agency also noted that it revised the country’s outlook from positive to stable. This decision reflects strong economic performance, increased productive diversification, and notable institutional progress.
According to the document, the announcement was made in New York on the first of this month following a meeting of the Rating Committee. During the meeting, the Dominican Republic’s economic fundamentals were positively assessed. The agency found no material negative changes, but instead observed significant improvements in governance.
Fundamentals of Improvement
Moody’s explained that the Ba2 rating is supported by strong and sustained GDP growth, which has averaged nearly 5% annually over the past 15 years. It also cited a notable rise in per capita income, driven by macroeconomic stability and the expansion of key sectors such as tourism, which has attracted substantial investment.
The agency highlighted the institutional strengthening that has taken place since 2020. This includes constitutional, administrative, and fiscal reforms, along with a clearer legal framework for controlling public spending and managing the deficit.
Moody’s further emphasized the country’s political and social cohesion, noting that it surpasses that of other nations in the region with similar ratings.
Structural Fiscal Challenges
Despite the upgrade, Moody’s cautioned that the rating is likely to remain capped in the short and medium term due to ongoing structural fiscal constraints. These include low tax revenue, representing only 16% of GDP, and a high proportion of debt denominated in foreign currency.
The agency pointed out that in 2024, debt service absorbed 21% of public revenues, while 66% of the debt was in foreign currency.
Looking ahead, Moody’s forecasts a fiscal deficit of 3.2% of GDP in 2025 and around 3% in the following years. This would stabilize public debt at approximately 48% of GDP.
However, the agency warned that without a comprehensive tax reform, fiscal limitations will continue to restrict the country’s payment capacity. Even so, Moody’s indicated that an increase in tax revenue could lead to further improvements in the rating.
Source: (Dominican Today)
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