Fitch Ratings: Jamaica Vote Means Continuity; Growth, Fiscal Challenges Rise

• According to Fitch, the incumbent Jamaica Labour Party’s general election victory signals economic and fiscal policy continuity.
• The scale and efficacy of Jamaica’s coronavirus policy response remain important to sovereign credit metrics, as data from Q2 2020 and uncertainty over tourism’s recovery point to a fiscal deficit and a GDP contraction are bigger than Fitch’s most recent forecast published in July.
• The pandemic-related spending done by the Administration since the start of the year resulted in the central government expenditure increasing 5% year-over-year (yoy) from April to June, while revenues contracted 20% YoY. Fitch’s most recent FY2020/2021 deficit forecast of 2.7% of GDP assumed revenues for the full fiscal year fall 11% and GDP shrinks 5.3% in the calendar year 2020.
• Although borders reopened to international tourists on June 15, stopover arrivals in July were only 16% of those a year ago. Visitors from countries deemed high risk, including the U.S., have to test negative for COVID-19 prior to arrival. Therefore, the possibility that Jamaica misses a substantial portion of the winter vacation season is a meaningful risk to the agency’s current 2020 GDP and FY2020/2021 deficit forecasts.

(Source: Fitch Solutions)