March 6, 2026
FitchRatings has upgraded Aruba’s Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDRs) to ‘BBB’ from ‘BBB-‘, and the Short-Term Foreign-Currency and Local-Currency IDRs to ‘F2’ from ‘F3’. The Rating Outlook is Positive.
A full list of rating actions is at the end of this rating action commentary.
The rating upgrade to ‘BBB’ reflects the continued rapid reduction in general government debt-to-GDP amid high fiscal surpluses, which have set the government on the path to meet its debt target a decade early. The upgrade is supported by Aruba’s progress toward strengthening the institutional fiscal framework, and by extremely high economic growth over the past few years, which have facilitated fiscal outperformance. The Positive Outlook reflects our expectation of further improvement in fiscal metrics and fortification of the fiscal framework through the passage of a Kingdom Law, which would strengthen Aruba’s relationship with the Netherlands and provide both fiscal and institutional benefits.
The ratings are also underpinned by strong governance, a record of institutional and financial support of the Netherlands, high per-capita income, large current account surpluses and favorable international reserves. The ratings are constrained by an elevated interest burden compared to peers, and by single-pillar tourism being highly exposed to external shocks.
Key Rating Drivers
Strong Government Finances Persist: The government continues to run high budgetary surpluses, which averaged 4.0% of GDP over the last three years, while the primary balance reached 7.4% of GDP in 2025. Fitch forecasts fiscal surpluses to shrink to around 2.0% from this year- still above the fiscal rule of 1.0% – given greater social spending, although continued under-execution of capex could yield higher surpluses than planned.
Rapid Reduction of Government Debt: Fiscal consolidation has reduced consolidated general government gross debt (GGGD) to an estimated 56.7% of GDP in 2025 from 101.1% in 2020. We expect consolidated GGGD to fall to around 50% of GDP over the next two years, below the ‘BBB’ median of 57%. We forecast the gross government debt figured used for compliance with the fiscal rule (it includes debt held by the pension fund, APFA, and was 62.7% in 2025) to hit the targeted debt anchor of 50% of GDP a decade early, in 2030, having already met its 70% of GDP target six years early in 2025.
Fiscal Framework is Robust and Improving: Aruba has a strong fiscal framework, extended and updated in Aruban legislation in December 2023. Its fiscal targets include a minimum budgetary surplus of 1% of GDP and a cap on the public-sector wage bill at 10% of GDP, in addition to the debt-reduction targets. A proposed new framework under a Kingdom Law (HOFA) is slowly progressing through the approval process, which would strengthen the fiscal framework, making it subject to both the Aruban and Dutch parliaments. The government expects it will go into effect in 2027, although its passage is not guaranteed.
The new law includes a debt anchor and operational rule, as well as an escape clause with a correction mechanism and a contingency reserve fund. Local Aruban legislation (LWHO) will provide numerical parameters for the Kingdom Law framework and will be passed in tandem. The passage of the Kingdom Law would lead to a reduction in the interest rate on the Dutch pandemic loans to around 3.4% from 6.9%. The Dutch have also offered to establish a capital loans facility to finance future projects at concessional rates. The relationship between the two countries has deepened, including at the civil service levels and across administrations, providing additional support and technical guidance for Aruba.
High Growth to Taper: Following a 24% contraction in 2020, Aruba’s economy rapidly expanded averaging 9.5% in 2021-2025 including an estimated 5.8% in 2025 in real terms, down from 7.6% in 2024. The boom reflects a strong rebound in the tourism industry, which will begin to slow as the pipeline of new construction comes to an end. Fitch expects real GDP growth to slow to 2.5% in 2026 and 2.0% in 2027, before trending toward potential of around 1.5%. We do not anticipate broad economic diversification given structural constraints, although some areas such as oil storage and transshipment and the short-term rental market may offer a modest medium-term boost.
Labor Market and Demographic Structural Constraints: Like many small island Caribbean economies, Aruba’s labor market has structural constraints, including brain drain and labor shortages, that weigh on potential growth. Aruba is highly reliant on an immigrant labor force, with migrants making up more than a third of the population. Its population is both shrinking and aging. These dynamics both reduce economic potential and increase costs, particularly for the national health insurance program and public pension system.
Successfully Managing High External Exposure: Despite being a small, externally exposed economy, Aruba has managed its risk of external shock well. Inflation is low, averaging 0.4% in 2025, although we expect it to gradually normalize toward 2.0%. The current account remains in a large surplus of 7.8% of GDP, reflecting the high value-add of the tourism product that more than offsets high import dependence. International reserves reached USD2 billion in 2025 or 6.7 months of current external payments (above the ‘BBB’ median of 4.8 months) and are expected to increase to USD2.5 billion over the next two years.
ESG – Governance: Aruba has an ESG Relevance Score (RS) of ‘5[+]’ & 5[+]’, respectively, for Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model. Aruba has a high WBGI ranking at 82.6, reflecting its long track record of stable and peaceful political transitions, well established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
– Public Finances/Structural: Absence of further progress to strengthen the fiscal framework, potentially due to a worsening relationship with the Netherlands, or weaker confidence in the pace of debt reduction.
– Macro: Severe economic shock, for example emanating from the tourism sector.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
– Public Finance/Structural: Sustained fiscal policy prudence, supported by the deepening of the institutionalization of the fiscal framework, for example through the passage of a Kingdom Law.
– Public Finances: Sharp fall in debt- to-GDP and/or interest-to-revenue levels.
– Macro: Higher growth prospects potentially supported by economic diversification.
Sovereign Rating Model (SRM) and Qualitative Overlay (QO)
Fitch’s proprietary SRM assigns Aruba a score equivalent to a rating of ‘BBB’ on the Long-Term Foreign-Currency (LT FC) IDR scale.
Fitch’s sovereign rating committee did not adjust the output from the SRM to arrive at the final LT FC IDR.
Fitch’s SRM is the agency’s proprietary multiple regression rating model that employs 18 variables based on three-year centered averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch’s QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.
Debt Instruments: Key Rating Drivers
Senior Unsecured Debt Equalized: The senior unsecured long-term debt ratings are equalized with the applicable long-term IDR, as Fitch assumes recoveries will be ‘average’ when the sovereign’s long-term IDRs is ‘BB-‘ and above. No Recovery Ratings are assigned at this rating level. See Rating Actions table below for the full set of instrument ratings.
Country Ceiling
The Country Ceiling for Aruba is ‘BBB+’, one notch above the LT FC IDR. This reflects moderate constraints and incentives, relative to the IDR, against capital or exchange controls being imposed that would prevent or significantly impede the private sector from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments.
Fitch’s Country Ceiling Model produced a starting point uplift of +1 notch above the IDR. Fitch’s rating committee did not apply a qualitative adjustment to the model result.
Summary of Data Adjustments
There is no Climate VS for Aruba due to the limited availability of data. However, Fitch is able to produce a Climate VS for the transition risk, which is 20 in 2035. Fitch has also qualitatively considered Aruba’s potential exposure to physical risks and concluded that these climate risk factors are sufficiently captured in the SRM.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Climate Vulnerability Signals
There is no Climate VS for Aruba due to data limitations, as noted above. Climate.VS are used for screening purposes only and do not have a direct impact on the rating.
ESG Considerations
Aruba has an ESG Relevance Score of ‘5[+]’ for Political Stability and Rights as World Bank Governance Indicators have the highest weight in Fitch’s SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Aruba has a percentile rank above 50 for the respective Governance Indicator, this has a positive impact on the credit profile.
Aruba has an ESG Relevance Score of ‘5[+]’ for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as World Bank Governance Indicators have the highest weight in Fitch’s SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Aruba has a percentile rank above 50 for the respective Governance Indicators, this has a positive impact on the credit profile.
Aruba has an ESG Relevance Score of ‘4[+]’ for Human Rights and Political Freedoms as the Voice and Accountability pillar of the World Bank Governance Indicators is relevant to the rating and a rating driver. As Aruba has a percentile rank above 50 for the respective Governance Indicator, this has a positive impact on the credit profile.
Aruba has an ESG Relevance Score of ‘4[+]’ for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Aruba, as for all sovereigns. As Aruba has track record of 20+ years without a restructuring of public debt as captured in our SRM variable, this has a positive impact on the credit profile.
The highest level of ESG credit relevance is a score of ‘3’, unless otherwise disclosed in this section. A score of ‘3’ means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch’s ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch’s ESG Relevance Scores, visit www.fitchratings.com/topics/esg/products#esg-relevance-scores.