Fitch Affirms Barbados at ‘B+’; Outlook Remains Positive

  • Fitch affirmed Barbados’ Long-Term Foreign Currency Issuer Default Rating at ‘B+’ with a Positive Outlook. The Positive Outlook reflects expectations that continued fiscal discipline and large primary surpluses will further reduce the country’s still-high debt burden and strengthen fiscal metrics.
  • Barbados’ fiscal deficit narrowed to 0.2% of GDP in FY2025/26 from 0.8% a year earlier. The deficit is expected to widen to 0.9% in FY2026/27 amid weaker economic activity and higher expenditure, before fiscal consolidation resumes. This compares favourably with the 3.3% median for ‘B’-rated sovereigns.
  • Central government debt is projected to decline to 92.2% of GDP in FY2026/27, down by around one-third from its 134.6% peak in FY2017/18. However, debt remains elevated relative to the 53% median for ‘B’-rated sovereigns, while domestic financing access remains constrained.
  • Economic growth is forecast to slow to around 1.7% in 2026 from 2.7% in 2025, amid global headwinds and weakness in tourism. Fitch expects medium-term growth to settle around 2%, still well above the 2000–2019 average of about 0.6%, with upside potential if the government successfully implements the Barbados Economic Recovery and Transformation Plan (BERT) 3.0 reforms.
  • Tourism growth has moderated following the strong post-pandemic rebound, with non-cruise arrivals increasing 1.5% in 2025 before slowing to 0.1% in H1 2026. Modest growth is expected to resume as source markets diversify and new airlift capacity comes online, while planned hotel developments are expected to increase room stock by 23% between 2025 and 2028.
  • External risks remain elevated given Barbados’ exposure to major tourism source markets and hurricanes. Fitch expects the current account deficit to widen to 6.6% of GDP in 2026 before improving to 5.9% in 2027, while international reserves are projected at US$1.4Bn.
  • A rating upgrade could follow continued high primary surpluses that reduce debt, improved access to financing beyond multilateral lenders, or stronger trend growth driven by reforms and investment. Conversely, fiscal slippage, a growth shock or a sharp deterioration in external liquidity could trigger negative rating action.

(Source: Fitch Ratings)