In a statement, Moody's said the key drivers behind the rating action were the large shock caused by the coronavirus (COVID-19) crisis will weigh significantly on economic and fiscal strength over the medium term as well as the funding conditions will become more constrained for the Government because of larger financing needs.
“The negative outlook reflects Moody's expectation that given the severity of the coronavirus shock, the Government's credit profile will continue to be exposed to downside risks related to the recovery of the tourism sector.
Given these dynamics, Moody's said it expects a loss of over 50 per cent of tourism flows in 2020 relative to 2019, which would lead to a GDP contraction of about 16 to 20 per cent.
Moody's said it believes that the recovery of the global tourism sector is exposed to potential changes to consumer behaviour following the coronavirus outbreak.
“Additionally, the Government's debt affordability will deteriorate as a consequence of higher interest payments and the loss of revenue, which will push the interest-to-revenue ratio to 22.6 per cent in 2020/21 from 13.5 per cent in 2018/19, although Moody's expects the ratio to decline somewhat in subsequent years as government revenue recovers.
