RATING DRIVERS
Supporting Factors
- Support from the UK Government as a British Overseas Territory
- The rebuilding of the economy and infrastructure continues following the passage of Hurricane Irma, although temporarily derailed due to COVID-19
- Fiscal performance remains carefully managed to control debt accumulation
Constraining Factors
- Small island developing state with significant capacity constraints, compounded by negative COVID-19 impacts
- Breached debt management benchmarks and increased debt servicing requirements
- Financial sector is characterized by high non-performing loans and low capitalization
Rating Sensitivity Factors
Factors that could, individually, or collectively lead to an improvement in the ratings and/ or Outlook include:
- Real GDP growth in excess of 5% over pre-hurricane level of GDP for at least 2 years
- A fiscal surplus of more than 5% of GDP recorded for at least 2 consecutive fiscal periods
- Meaningful diversification of the economy
Factors that could, individually, or collectively lead to a lowering of the ratings and/ or Outlook include:
- Delay in the implementation of GST in 2022
- A significant decline in grant support without other compensating revenues
- A change in the island’s status as a British Overseas Territory or a material change in the level of support rendered to Anguilla
- The banking sector’s capitalization ratio falling below 8%
SOVEREIGN BACKGROUND
Anguilla is the most northerly of the Leeward Islands in the Eastern Caribbean. Apart from the main island of Anguilla itself, which is sixteen (16) miles long and a maximum of three (3) miles wide, the territory includes a number of smaller uninhabited islands and cays. The island is noted for its ecologically important coral reefs. Anguilla is parliamentary representative democratic dependent Overseas Territory of the United Kingdom. The 1982 Constitution (amended in 1990) provides for a Governor, an Executive Council and a House of Assembly. The present Governor, Her Excellency Ms. Dileeni Daniel-Selvaratnam, took office in January 2021, and is responsible for external affairs, international finance, defence and internal security (including the police force) and the public service. General Elections were held on the 29 June 2020. The Honourable Premier, Dr. Ellis Webster of the Anguilla Progressive Movement (APM) was inaugurated on June 30, 2020. The APM currently holds seven out of the eleven parliamentary seats.
Construction and tourism are the main sources of economic production. Construction activity is typically driven by private sector investment in hotel development. Anguilla’s economy is highly vulnerable to downturns in the global economy, high international oil prices and unfavourable weather conditions.
Analytical Contacts:
Stefan Fortuné
Tel: 1-868-627-8879 Ext. 227
E-mail: sfortune@caricris.com
Maxwell Gooding
Tel: 1-868-627-8879 Ext. 228
E-mail: mgooding@caricris.com
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