On June 16, 2014, Standard & Poor's Ratings Services affirmed its 'BBB+/A-2' long- and short-term sovereign credit ratings on Aruba. The outlook remains stable. We also affirmed our transfer and convertibility assessment of 'BBB+'.
The ratings on Aruba reflect its stable parliamentary government, its status as a member of the Kingdom of the Netherlands, and its relatively high per capita GDP.
These rating strengths are countered by Aruba's highly concentrated economy and relatively high fiscal deficits over the past three years.
We are affirming our 'BBB+/A-2' sovereign credit ratings on Aruba.
The stable outlook reflects our view that Aruba will gradually reduce its fiscal deficit, which will lower its fiscal and external vulnerabilities.
The stable outlook balances the recent deterioration in the government's fiscal and debt positions as well as the country's external indicators with the expectation that the government is taking adequate measures to reduce its fiscal deficits and the continued strength of the country's tourism industry.
The government has stated that its key focus for the second term is fiscal consolidation, largely by reducing expenditures in 2014 and then freezing them over the next three years. If successful, the government's fiscal deficits in terms of GDP would greatly diminish and the debt burden would begin to fall. A better fiscal position combined with improved external liquidity (through improvements in the country's balance of payments and international reserve position) could lead to an upgrade. On the other hand, a deterioration in the country's external liquidity position due to a significant increase in net external debt or a fall in international reserves could lead to a downgrade.