Moody’s projects accelerated growth for SVG this year

It is expected that St Vincent and the Grenadines (SVG) will experience an acceleration in growth this year, as the country continues its recovery efforts following the shocks caused by the pandemic and volcanic eruption last year.

This is according to the latest report on the country from Moody’s Investors Service (MIS), which notes that the expected growth will facilitate “fiscal consolidation and help to stabilise debt burden”. 

MIS is known world-wide as the leading provider of credit ratings, research and risk analysis. 

A rating from this entity is said to enable issuers to create timely, go-to-market debt strategies with the ability to capture wider investor focus as well as providing investors with a comprehensive view of global debt markets through credit ratings and research. 

The official Moody’s website also notes that its trusted insights can help decision-makers navigate the safest path through turmoil and market volatility.

Moody’s report on this country was officially published on March 1, 2022,  it affirmed SVG’s long-term B3 issuer ratings and short-term non-prime rating, and maintained a stable outlook. 

It also stated that the affirmation of the B3 ratings was driven by several considerations. 

The first consideration listed the “relatively modest impact of shocks on economic activity and expected recovery”. 

“However, St Vincent’s economy remains vulnerable to climate shocks with limited diversification prospects,” Moody’s report said. 

The second consideration for the affirmation of the B3 rating highlighted in the report noted that the country’s debt is projected to stabilise, albeit at higher levels, and that debt affordability will remain stable. 

Also listed in the second consideration is the access to concessional financing, which would provide liquidity for debt service payments. 

Moody’s latest report on SVG also highlighted factors that could lead to either an upgrade or downgrade of ratings. 

“There is limited potential for a rating upgrade in the near term. Higher sustained economic growth, combined with a faster pace of fiscal consolidation, would be credit positive and support a higher rating. A significant improvement in the government’s credit profile associated with a steady decline in the debt-to-GDP ratio could exert upward pressure on the rating,” it said. 

“Downward rating pressure could emerge if St Vincent’s access to external liquidity on concessional terms were curtailed, leading to liquidity pressures that impact debt service payments. If a large adverse environmental shock were to lead to a substantial deterioration in St Vincent’s fiscal and debt metrics or materialisation of contingent liabilities from state-owned enterprises or increased commercial borrowing would be credit negative”.