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Climate change could affect Belize’s credit rating

Posted: Wednesday, November 9, 2016. 11:59 am CST.

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By BBN Staff:  Belize’s credit rating, which is already vulnerable based on the country’s economic status, could be further affected by the increasing effects of climate change, ratings agency Moody’s reported.

“Climate change is expected to become an increasingly dominant factor in our analysis of the credit profiles of those sovereigns that are most susceptible to its effects over the coming decades,” Moody’s said in a report published Monday.

It noted that Belize, like Jamaica, with a Caa2 rating are considered among the most vulnerable countries to be affected by ratings based on climate change risk factors.

Climate change has ramifications for countries’ credit profiles through potential economic impact, damage to infrastructure, rising social costs, and population shifts, Moody’s said.

Moody’s measured sovereigns’ vulnerability by their “exposure” and “resilience” to climate change.

Exposure was determined by a sovereign’s geographic location and economic diversification, while resilience was measured by its adaptive capacity, fiscal flexibility and income levels.

Countries with large economies and landmasses like Russia and China experienced a higher frequency of natural disasters in the past decade but were also better insulated from their impact on GDP, the agency found.

More susceptible countries meanwhile tended to be lower rated already, an overlap which also reflects higher reliance on agriculture in the economy and weaker infrastructure quality.

“While climate change does not have near-term implications for sovereign ratings, it already exerts some influence on credit profiles of those sovereigns most susceptible to its effects,” Moody’s said, adding this influence would grow over time.


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