The ratings on Barbados reflect improved but still-high external pressures, resulting from high current account deficits (6.8% of GDP expected in 2007), and limited fiscal flexibility, due to the government's relatively high debt and interest burdens. This is balanced by Barbados' political stability and strong governance within both the public and private sectors. The government has played a central role in shifting the economic focus toward services from manufacturing and agriculture and has taken important steps during the past three years to reform the pension system, improve the tourism infrastructure, and liberalize telecommunications. Continuing challenges for the country are to increase tourism prospects and diversify into new service sectors to generate solid economic growth. We expect the fiscal balance to
