RATING DRIVERS
Strengths
- Continued support from the United Kingdom as an Overseas Territory
- Income and economic fundamentals create high GDP per capita, though tempered by COVID-19
- Dollarization has supported strong economic fundamentals and trade stability
- Prudent fiscal policy guided by the PEFM resulting in low debt levels
Weaknesses
- Human resource capacity constraints on account of a small population base
- Lack of monitoring of the external sector may hinder targeted policymaking
Rating Sensitivity Factors
Factors that could lead to an improvement in the ratings and/ or Outlook include:
- Real GDP growth of at least 5% sustained over the next 2 years
- A sustained improvement in visitor arrivals to greater than pre-hurricane levels over the next 2 years
- Continued improvement in company incorporations and registrations to greater than 25% above pre-pandemic revenues sustained over 2 years
Factors that could lead to a lowering of the ratings and/ or Outlook include:
- An increase in the total public sector debt to above 40% of GDP
- A change in the island’s status as a British overseas territory or a material change in the level of support rendered to the VI from the UK
SOVEREIGN BACKGROUND
The Virgin Islands (VI) is a British Overseas Territory located in the Caribbean. The 150 km2 (58 mi2) Territory consists of the main islands of Tortola, Virgin Gorda, Anegada, and Jost Van Dyke, along with over 50 other smaller islands and cays. About 15 of the islands are inhabited. The VI operates as a parliamentary democracy with its own constitution and an elected Head of Government, named the Premier of the VI. Ultimate executive authority in the VI is vested in the Queen of England and is exercised on her behalf by the Governor of the VI. The Governor is appointed by the Queen on the advice of the British Government. Defence and foreign affairs are the responsibility of the United Kingdom (UK).
Analytical Contacts:
Kyla Balwant
Tel: 1-868-627-8879
E-mail: [email protected]
Stefan Fortuné
Tel: 1-868-627-8879 Ext. 228
E-mail [email protected]
Website: www.caricris.com
Email: [email protected]
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