Being a net fuel importer, the Dominican Republic has greatly benefitted from the drop in oil prices. It is largely thanks to this price drop that the current account deficit dropped from 4.1% of GDP in 2013 (and around 7% in the prior three years) to 3.1% in 2014. This figure still implies a significant financing need, however, which the Dominican Republic has found difficult to meet. Short-term debt has edged up in recent months while reserves have declined. The latter now again represent less than three months of goods and services imports, indicating an elevated liquidity risk. This evolution, along with downside risk pertaining to the gradual tightening of international financing conditions, has urged Credendo Group to downgrade the Dominican Republic’s short-term political risk classification from category 2/7 to 3/7.
20 May 2020
Short-term political risk and commercial risk: Further downgrades due to global recession induced by covid-19 pandemic
As the covid-19 health and economic shock further deteriorates countries’ external liquidity and the business environment on a world scale, ...
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