Fitch Affirms Jamaica’s B+ Rating, Outlook Stable

• On March 18, 2020, Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B+' and maintained its stable outlook.
• This rating is supported by World Bank Governance Indicators that are substantially stronger than the 'B' and 'BB' medians, a favorable business climate according to the World Bank Doing Business Survey, moderate inflation, and moderate commodity dependence. These strengths are balanced by vulnerability to external shocks, a high public debt level, and a debt composition that makes the sovereign vulnerable to exchange rate fluctuations.
• The Stable Outlook is supported by Fitch’s expectation that the public debt level will return to a firm downward path post-pandemic, which is underpinned by political consensus to maintain a high primary surplus, the resilience of external finances, and stronger economic policy institutions.
• Factors that could lead to positive rating action include a large and sustained decline in government debt/GDP ratio over the medium term; a strengthening of growth prospects without the emergence of macroeconomic or fiscal imbalances; and entrenchment of institutional improvements in the fiscal policy framework that enhances confidence in medium-term economic and fiscal performance.
• On the other hand, an increase in debt-to-GDP, for example owing to marked depreciation of the Jamaican dollar or revenues failing to recover at expected rates; economic growth below expectations caused, for example, by the tourism industry being affected by a third wave of the pandemic; and an inability to access financing or evidence of distressed financing conditions could lead to a downgrade.

(Source: Fitch Ratings)