From BusinessWire.com

According to Shelly Shetty, Fitch Senior Director and lead sovereign analyst for Aruba, ‘The government’s efforts to consolidate public finances in 2005 and measures taken to strengthen the financial viability of the universal health scheme are the key factors behind the revision of the Rating Outlook.’ In 2005, the fiscal deficit declined to 3.8% of GDP (on an accrual basis) from 6% of GDP in 2004, and the budget for 2006 is targeting a further reduction to 1.7%. In 2006, the health care scheme (AZV) increased health premiums by two percentage points, which should help in eliminating losses at the AZV, thereby reducing the transfers from the government. The government has also reformed the public sector pension system for new employees, which should limit the increase in future pension liabilities. Although arrears to suppliers and public sector entities increased somewhat in 2005, the stock of arrears declined from 8% of GDP in 2003 to 4.5% of GDP in 2005, thereby boosting fiscal transparency. Finally, the government appears committed to further reducing the fiscal deficit by exercising more expenditure restraint and increasing revenue collection through tax administrative measures and, possibly, a package of tax increases. With these, and even with some slowdown in GDP growth, Fitch expects public debt to begin declining relative to GDP this year.

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