S&P Revises Jamaica Outlook to Positive from Stable On Institutional Strengthening

  • On Sept. 24, 2024, S&P Global Ratings revised its outlook on Jamaica to positive from stable. At the same time, it affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings on Jamaica, its 'B' short-term foreign and local currency sovereign credit ratings, and its transfer and convertibility assessment of 'BB'.
  • The positive outlook reflects the possibility of an upgrade if continued strengthening of the policy framework raises the likelihood of more sustainable public finances and balanced economic growth over the long term.
  • Furthermore, S&P expects renewed GDP growth and improved budget balances in 2025 after temporary setbacks in 2024 due to Hurricane Beryl. It now expects a 1.5% contraction in the economy for 2024 versus its pre-hurricane expectation of 1.6% growth. As the country recovers, growth should resume, and by 2026 and 2027 should return to the trend of 1%-2% annually.
  • Jamaica's net debt to GDP is falling and is now below 60% of GDP. The government's interest burden remains high but is also decreasing. As such, the interest burden is expected to fall modestly to 16.8% of government revenues in fiscal 2025 and to less than 15% by 2027.
  • Additionally, in 2024, the Bank of Jamaica began reducing its policy rate, which stands at 6.75% as at August 2024. The Bank is expected to maintain cautious monetary policy, which combined with tight fiscal policy, will keep inflation within the target band over the next several years.
  • With that said, external shocks are still a risk for Jamaica. To address the country's vulnerabilities to weather-related events, the government has created a disaster risk policy framework to build resiliency and respond faster in the aftermath of a disaster, which served Jamaica well at the onset of the pandemic. Although Jamaica has made progress on mitigating the fiscal risks, its economy and infrastructure remain vulnerable to physical risks.
  • Overall, S&P believes Jamaica's institutions are strengthening, leading to improved public finances, more economic stability, and greater resilience to shocks, as demonstrated by the country's experience following a recent hurricane.

(Source: S&P Ratings)