NEW YORK, Aug 22 (Reuters) - Fitch Ratings on Thursday revised its sovereign credit outlook on Aruba to negative from stable citing a sluggish economy, large fiscal imbalances, rising government debt and increased vulnerability because of a halt in fuel exports.
The Caribbean nation’s investment grade BBB credit rating was affirmed, Fitch said.
Valero Energy Corp idled its refinery on the island because of the high cost of running the facility.
“The growth and external forecasts assume that refining operations and fuel exports by Valero will remain suspended during 2013 - 2015. However, the company will continue to be a provider of transshipment services during this period,” Fitch said.
Standard & Poor’s has Aruba one notch higher at BBB-plus with a stable outlook.
The global financial crisis and suspension of operations at the Valero refinery have led to a cumulative 12 percent shrinkage of Aruba’s economy between 2008 and 2012, Fitch said.
“Downside risks to growth remain depending on the tourism sector performance and the execution of large public-private partnerships to transform the infrastructure network and energy matrix of the island,” Fitch said.
“Aruba’s ‘BBB’ ratings are supported by its impeccable debt repayment record, high per capita income, strong rule of law, political and social stability,” Fitch said in its statement.