Fitch affirms Barbados at ’B+’ with positive outlook as fiscal metrics improve

Fitch Ratings has reaffirmed Barbados's Long-Term Foreign Currency Issuer Default Rating at B+ with a Positive Outlook, praising the Caribbean nation's debt reduction efforts and fiscal discipline. The agency noted that primary surpluses and structural reforms are enhancing public finance metrics, positioning the country for a possible upgrade despite current challenges in key economic sectors.

Barbados' fiscal outlook reflects a decade-long period of significant consolidation, with central government debt projected to decrease to 92.2% of GDP in 2026/27, down from a high of 134.6% in FY17/18. Although the fiscal deficit is anticipated to increase slightly to 0.9% of GDP this year due to higher spending and temporary economic slowdown, Fitch expects a resumption of consolidation in the near future, in line with historical trends and comparable economies.

Economic growth is now on a more sustainable medium-term path, averaging around 2%, a marked improvement from the sub-1% average observed over the last two decades prior to the pandemic. Despite a slowdown in real GDP expansion to 1.4% in the first half of 2026, due to flat tourist arrivals, upcoming hotel capacity additions and major infrastructure investments are expected to boost the sector.

To support further structural reform, the government has introduced the BERT 3.0 economic plan and established a new 36-month precautionary Stand-by Arrangement with the IMF.

While the credit rating agency cautioned that Barbados faces high debt levels, exposure to global shocks, and severe weather risks as its main vulnerabilities, it highlighted strong governance indicators and $1.4 billion in international reserves as crucial safeguards against potential downturns.