On January 31st, 2019 Fitch Rating agency upgraded Jamaica’s credit rating from B to B+ with a stable outlook
Fitch attributed the upgrade of Jamaica's Issuer Default Ratings (IDRs) to the country’s track record of large primary surpluses that have cut general government debt/GDP significantly. Jamaica has run one of the largest primary surpluses of any sovereign rated by Fitch at about 7% of GDP in 2018. The primary surplus has been above 7% since 2013, reducing general government debt/GDP to a projected 96.4% in FY 2018 from a peak of 135.3% in FY 2012.
The debt burden is on a downward path but still compares unfavorably to the current ‘B’ median of 60.7% of GDP. The fiscal stance is being guided by a fiscal rule that aims to reduce debt to 60% of GDP by 2025. Fitch also expects current fiscal policy settings to lead to a sustained fall in debt/GDP. Fitch’s debt dynamics model assumes rising interest rates in the U.S., medium-term growth of 2% and a narrowing of the primary surplus to 5.5% of GDP by FY 2027; under these assumptions debt is expected to fall under 60% of GDP by FY 2027.
Some key drivers of the rating upgrade include projections that government surplus as a percentage of GDP will improve, the decline in government interest burden, cross-party support for the economic reforms that began with the IMF and the BOJ bill that aims to make the central bank independent with inflation targeting the explicit goal of monetary policy.