Falklands plans to borrow US$ 85 million for the port, and manages a credit rating of A+ from S&P Global
Reuters has reported that the Falkland Islands got its first sovereign credit rating, an investment-grade A+ score from S&P Global on Monday, as the tiny British-run territory looks to dip into borrowing markets to pay for improvements to its main port.
Prior to 2020, the Falklands had virtually no sovereign debt, but its plans to upgrade the port in the capital Stanley mean it is expected to borrow roughly 60 million Falkland Island pounds (US$ 85 million) this year.
The planned borrowing for the port will leave the islands’ debt-to-GDP ratio – the standard metric of fiscal health – at roughly 21%, S&P estimated.
Its new A+ rating puts the Falklands, which has a population of just 2,563 according to the government’s website, in line with China and Japan.
Fishing accounts for around half of the Falklands US$300 million GDP, which along with oil and gas exploration, helped propel economic growth by 11% a year on average between 2009-2018.
The economy ground to a halt last year when COVID-19 hit sectors such as tourism. The departure of the United Kingdom from the European Union has also presented a challenge because it has led to tariffs on the territory’s fish exports.
In contrast with several other small overseas territories, the Falkland Islands does not receive any direct budgetary assistance from the UK.