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Investing.com -- S&P Global Ratings upgraded Barbados’ long-term credit rating to ’B+’ from ’B’ on Friday, citing improved governance that has led to better economic growth and a declining debt burden.
The rating agency maintained a stable outlook, reflecting expectations that Barbados will continue policy reforms and reduce fiscal deficits while sustaining GDP growth over the next two years.
Barbados completed its extended fund facility and arrangement under the resilience and sustainability facility with the International Monetary Fund in 2025. The country has signaled its intention to maintain high primary fiscal surpluses and decrease its debt burden, targeting 60% debt to GDP by fiscal 2035-2036.
The tourism sector remains a key driver of Barbados’ economy, directly contributing just under 10% of GDP and indirectly about 40%. Tourist arrivals for the first six months of 2025 continued to increase year over year, with the highest share coming from the U.S., followed by the U.K.
S&P expects Barbados’ GDP growth to settle at 2.0% by the end of 2025 and hover around 2% in the next few years, pushing GDP per capita to $25,800 in 2025.
The country posted a decreasing overall deficit of 0.9% of GDP in fiscal 2025, down from 1.7% in the previous year. S&P expects the deficit to fall further to 0.8% of GDP in fiscal 2026.
In June 2025, Barbados issued a $500 million bond, using the proceeds to repay commercial and IMF debt, which restored some capacity for future IMF borrowing if needed.
The current account deficit is forecast to narrow to 6.0% of GDP in 2025 from a peak of 10.3% in 2021, supported by strength in tourism receipts. International reserves stood at about $1.9 billion as of June 2025.
S&P noted that Barbados’ banking sector remains stable, with banks holding large cash balances with the central bank and increasing capital adequacy ratios.
The rating agency could raise Barbados’ ratings in the next 12-18 months if continued reform momentum and fiscal adjustment support sustained higher GDP growth compared to similar-rated sovereigns.
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