External Funds, Cost Cuts Bolster Dominican Republic COVID Response

• The Dominican Republic's (BB-/Negative) timely external financing and budgetary belt-tightening have eased some near-term risks from the COVID-19 pandemic, Fitch Ratings says.
• The administration of President Luis Abinader is moving to tackle longer-standing structural weaknesses, which could help stabilize the rating outlook, but its capacity to pass fiscal reforms will be critical to the success of its medium-term fiscal objectives.
• January's US$2.5Bn sovereign bond issuance means the government has secured half of its 2021 budgeted financing needs, while December's liability management operation reduced 2021 debt payments by nearly US$430Mn.
• The sovereign tapped the external bond market twice in 2020, including September's US$3.8Bn issue, having quickly secured external liquidity from the IMF (US$650Mn) and multilateral banks to offset plummeting tourism foreign-exchange receipts. Prudent management of external amortizations limits refinancing risk.

(Source: Fitch Ratings)