Hagåtña, Guam – The Government of Guam is proud to announce that S&P Global Ratings has affirmed all Government of Guam ratings and removed the CreditWatch negative—where they were placed with negative implications on November 27, 2024—and assigned a Positive outlook to Guam’s credit profile. Having reviewed the Government’s financial performance, in particular the recently completed Fiscal Year 2023 audit, in a reaffirmation of confidence in our fiscal management, S&P Global Ratings has maintained the following ratings:
- General Obligation (GO) Debt: ‘BB–’ (secured by a full faith and credit pledge)
- Business Privilege Tax (BPT) and Section 30 Revenue Bonds: ‘BB’
- Appropriation-Backed Certificates of Participation (COPs): ‘B+’
Acting Governor Josh Tenorio expressed his confidence in the government’s ongoing fiscal posture and management. “I am immensely proud of the dedicated efforts of our administration and the commitment of our public servants in ensuring Guam’s fiscal health,” he stated. “This affirmation of our ratings is not only a validation of our transparent and accountable budgeting practices but also a promise to the people of Guam that we remain vigilant in managing our resources responsibly. Our focus will continue to be on strengthening our reserves and promoting sustainable economic growth so that we can effectively address both current challenges and future opportunities.”
He added, “Our commitment to prudent fiscal management is at the heart of every decision we make. The positive outlook on our ratings reinforces that commitment. As we navigate the complexities of an evolving economic landscape—including the gradual recovery of our tourism sector and the ongoing benefits from military and federal investments—we remain steadfast in our resolve to build a resilient financial future for Guam. This achievement reflects our collaborative efforts to balance economic growth with responsible budgeting, and we are confident that it will serve as a strong foundation for future progress.”
Fiscal and Economic Overview
Over the past several years, GovGuam’s fiscal performance has improved markedly. The return of a positive general fund balance for the first time in over a decade is a testament to the effective measures taken to bolster revenue streams and rein in expenditures. Key factors contributing to this turnaround include enhanced income tax collections, increased federal support following the global pandemic, and targeted initiatives aimed at economic diversification.
Despite these positive developments, Guam’s economy remains vulnerable to external pressures. Our territory’s economic base—heavily reliant on international tourism and military spending—faces challenges from shifts in federal spending priorities, adverse climate events, and the lingering effects of the pandemic on visitor arrivals. In 2024, while visitor numbers reached their highest level since 2020, they were still 55.7% below pre-pandemic figures. Nevertheless, year-over-year growth of 12.6% in visitor arrivals indicates encouraging momentum.
Credit Profile and Strategic Investments
The affirmed ‘BB–’ rating on our GO bonds reflects a careful balance between our strong fiscal fundamentals and the challenges inherent in managing an elevated debt and liability profile. Our revenue bonds, rated ‘BB’ for BPT and Section 30 revenues and ‘B+’ for appropriation-backed COPs, benefit from stable pledged revenue and robust credit quality. These ratings underscore the importance of maintaining fiscal discipline as we continue to invest in critical projects across infrastructure, education, and public safety.
Guam’s strategic location in the Asia-Pacific region remains a vital asset. Ongoing military projects and federal investments in military construction have not only provided essential support to our local economy but have also positioned Guam as a key player in regional defense. With military spending on the rise—bolstered by initiatives outlined in the Department of Defense’s Future Years Defense Program—the island’s economic prospects continue to look promising despite inherent vulnerabilities.
Looking Ahead
Our administration is committed to leveraging this positive outlook to drive further improvements in our fiscal management. Key initiatives include:
- Strengthening Reserves: Continuing to build a robust fiscal cushion to mitigate risks associated with economic volatility and natural disasters.
- Enhancing Revenue Diversification: Expanding economic opportunities beyond our traditional sectors to reduce dependency on tourism and military spending.
- Ensuring Transparency and Accountability: Upholding rigorous budgeting practices and timely financial reporting to maintain public trust and support sustainable growth.
For more information or questions, contact Lester Carlson, Director of the Bureau of Budget and Management Research (BBMR), at lester.carlson@bbmr.guam.gov.
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