On the evening of 15 November 2024, the Morningstar DBRS ratings agency published a report confirming the rating for the Republic of San Marino at BBB (low).
Morningstar DBRS’s assessment of San Marino’s economic situation shows a stable trend, indicating that the risks associated with the country’s ratings are balanced. The key points relating to the analysis are summarised below:
1. Prudent fiscal strategy: The new government is expected to continue to pursue a prudent fiscal strategy, which should contribute to a reduction of the public-debt-to-GDP ratio in the coming years. Despite higher interest costs, the fiscal deficit is expected to remain small, estimated at 1.0 % of GDP in 2024 and 1.3 % in 2025.
2. Tax reform: The implementation of a tax reform is in the pipeline. It would be an important opportunity to improve government accounts in the medium term. This could facilitate the management of finances and help stabilise debt.
3. Debt redemption: Public sector debt redemptions, which account for about 17% of GDP, could remain high in 2027. However, a proactive approach by the government is expected to reduce the rollover risk.
4. Contingent liabilities risks: Although contingent liabilities risks could adversely affect government accounts, there is a significant reduction of the NPL ratio in the banking sector, which is expected to continue over time.
5. Positive aspects: San Marino’s ratings benefit from a relatively high per capita income, a favourable net asset position and significant bank assets. A stable political system also supports decision-making.
In summary, there are significant challenges ahead but San Marino’s prospects appear manageable, thanks to prudent fiscal policies and improvements in the banking sector, which could further strengthen economic stability over time.
<<Read the report Morningstar DBRS>>
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