The ratings on Barbados balance still-high external pressures and limited fiscal flexibility with political stability and strong governance within both the public and private sectors. The government has played a central role in shifting the economic focus from manufacturing and agriculture toward services and recently took important steps to reform the pension system, improve the tourism infrastructure, and liberalize telecommunications. A key challenge for the country will be to increase tourism prospects and to diversify into new service sectors to generate solid economic growth after 2007. A fiscal adjustment is underway in Barbados. This adjustment is expected to lead to a small surplus of 0.2% of GDP in the 2007 calendar year, up from a deficit of 0.9% (including the
