S&P Upgrades Jamaica’s Credit Rating to a Historic BB-  

  • Standard and Poor's (S&P) Global Ratings upgraded its long-term foreign and local currency sovereign credit ratings on Jamaica to 'BB-' from 'B+', and affirmed its short-term foreign and local currency sovereign credit ratings at 'B'. The outlook remains stable.
  • The stable outlook reflects the expectation that Jamaica will continue to pursue cautious macroeconomic policy and maintain its commitment to prudent public sector finances and debt reduction.
  • S&P assumes that small fiscal surpluses will sustain a decline in debt over the next one to two years. Furthermore, the agency expects that tourism will continue to support external balances and GDP growth.
  • Jamaica remained committed to meeting its ambitious debt reduction targets during the pandemic and remains committed to debt reduction and prudent public finances. After eroding in 2020, the country's debt-to-GDP balance is trending down to new historical lows, supported by a return of fiscal surpluses and a growing economy.
  • The agency expects the government will report a small surplus in the current fiscal year (ending March 31, 2024), of J$10 billion, or 0.3% of GDP, similar to the surplus in the previous fiscal year. Further, there is an expectation that the average annual change in net government debt will be 0.8% over the next three to four years, reflecting future surpluses as well as the negative effect of a likely depreciating Jamaican dollar on the value of the country's large external debt.
  • Jamaica's net debt to GDP is falling and reached a historical low of 64% in 2022. It is believed that this ratio will continue to decline, to just below 60% by the end of 2024. The government's interest burden remains high but is also decreasing. The agency expects that it will fall modestly to 17.5% of government revenues in fiscal 2024 and to less than 15% by 2026. The government estimates its financing needs will be J$139 billion this year, and S&P expects it will meet them through a combination of predominantly concessionary multilateral funding and domestic borrowing.
  • While the outlook is stable, the agency could further upgrade the ratings over the next two years if Jamaica's trend economic growth rate rose consistently and converged with that of peers at a similar level of economic development. That, along with continuity in fiscal policy, would increase the sovereign's economic resilience. Equally, the agency could lower the ratings during the next two years if it believed a changing fiscal policy would lead to sustained deficits, reversing debt reduction and resulting in a persistently higher debt burden; or if the economy fails to perform as expected, weakening the country's external position.

(Source:  S&P)