Bermuda has the third-highest gross domestic product (GDP) per capita of the 113 countries given ratings by renowned analysts Standard & Poor?s (S&P).

And the S&P report on the Island, a copy of which was obtained by The Royal Gazette, showed the level of Government indebtedness is among the lowest of all the countries surveyed.

However, it also points out that the burgeoning international business that is driving the economy is also straining the Island?s infrastructure.

On Friday, Finance Minister Paula Cox revealed that in its ?sovereign rating? for Bermuda, S&P had upgraded the long-term outlook for Bermuda from stable to positive.

S&P was commissioned by the Government to give the Island a sovereign credit rating, which is a measure of a government?s credit risk and is a service performed by the analysts for 113 countries.

S&P affirmed its AA (positive) long-term and A-1+ (stable) short-term sovereign credit ratings for Bermuda. Credit analyst Lisa Schineller said in her report that the Island?s success ?reflects continued vibrancy in Bermuda?s competitive international business sector amid ongoing sound economic management?. ?Bermuda?s favourable macroeconomic policy mix, stable exchange rate, and well-regarded tax and regulatory regimes have bolstered the international business sector, ensuring its continuance as the main engine of economic growth in Bermuda,? Ms. Schineller said. ?Bermuda continues to remain competitive as a location of choice for the global financial services industry.?

The report highlighted the arrival of a new wave of ?large and well-capitalised? reinsurance companies that have set up on the Island following the huge property damage caused by a series of hurricanes that hit the US in 2005, in particular Hurricane Katrina.

?In addition, hedge funds have shown increasing interest in Bermuda as an offshore domicile,? the report continued. ?The buoyant international business sector, however, is straining Bermuda?s small-island-economy infrastructure, particularly in housing and transport. Attending and redressing these areas, as well as improving education and vocational skills to facilitate increased Bermudian participation in the financial services sector, are at the forefront of the Government?s agenda.?

Also highlighted are the reasoning behind the Island?s credit upgrade. ?Bermuda?s ratings are supported by a very low level of government indebtedness ? one that is among the lowest of rated sovereigns,? the report states. ?Given the fixed exchange rate with the US dollar, such policy flexibility is key to the Island?s creditworthiness. Gross general government debt is projected at five to six percent of GDP in 2007 and 2008, and, net of liquid assets, the Government is a creditor on the order of 20 percent of GDP.?

Ms Schineller added that this situation gave the Government flexibility to increase spending on social initiatives.

?Premier Ewart Brown, who assumed office following his victory at the governing Progressive Labour Party?s October 2006 leadership conference, is committed to improved provision of social services while maintaining fiscal prudence,? sthe analyst said, adding that S&P expected the Social Agenda to take precedence ?over the divisive issue of sovereignty? for the British Overseas Territory.

?The positive outlook reflects Standard & Poor?s expectation that sound policy management will continue to support the expansion of the international business sector,? Ms. Schineller noted. ?Additional signs of continued pragmatic policies as the general elections (due by August 2008) approach, in terms of fiscal performance and implementation of term-limits for non-resident work visas (effective April 2007), would support improved creditworthiness,? she concluded.