NEW YORK, June 14 Standard & Poor's on Friday
downgraded Aruba's sovereign credit rating one notch to BBB-plus
from A-minus, citing deteriorating fiscal and external balance
sheets following closure of the island's oil refinery.
The outlook on the new rating is stable.
"Closure of the Valero refinery likely led to an economic
contraction of 1.2 percent of GDP in 2012. Furthermore, the
closure will contribute to larger current account deficits and a
higher external debt burden in the coming two years," S&P said
in a statement.
A combination of the refinery plus spending pressures in
health care and pensions have contributed to a weakening of the
nation's public finances in recent years, S&P said.
S&P points out that rising tourism receipts, plus a public
investment program providing extra economic stimulus, will help
mitigate the economic impact of the refinery's closure.
"We expect real per capita GDP growth to be 1.7 percent in
2013. Planned private sector investments in the tourism sector,
plus public sector investment in infrastructure, should sustain
per capita GDP growth of just over 2 percent in the next two
years," S&P said.
Aruba's fiscal deficits are projected to ease to 5 percent
of gross domestic product in 2013 from an average of more than 6
percent in 2011-12.