Fitch Affirms Jamaica's Ratings at 'BB-'; Outlook Positive

• Fitch Ratings affirmed Jamaica's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-'. The ratings reflect stronger governance than the peer median, significant progress with debt reduction, a sound fiscal framework, and a strong political commitment to deliver large primary surpluses. Debt-to-GDP has fallen to a forecast 70.8% in fiscal 2024/2025 from a high of 135.3% of GDP in fiscal 2012/2013.
• However, the ratings remain constrained by deep structural weaknesses, including subdued growth potential owing to a high crime rate, low productivity and weak demographics, and vulnerability to external shocks including weather-related.
• Despite the economic downturn last year caused by Hurricane Beryl and extensive rain in the fall, the overall surplus in the fiscal year ending in March 2025 will be slightly better at 0.3% of GDP than fiscal year 2023/24 at 0.0% of GDP. This is in part due to one-off revenues from insurance payments as well as concession proceeds from airports.
• These large primary surpluses are expected to reduce general government debt GDP to 66.3% of GDP in fiscal year 2025/26 from 70.8% this fiscal year. Debt is expected to fall to 63.5% in fiscal 2026/2027, putting it on track to meet the government's debt target, although the 60% target is still higher than the current 'BB' median of 55.6%.
• Most notably, Jamaica has remained committed to an economic policy framework built on two key pillars: the Bank of Jamaica's (BoJ) inflation-targeting monetary policy and fiscal policy anchored on debt reduction targets. Inflation fell to 5%, the midpoint of the BOJ's target range, at year-end 2024.
• The Rating Outlook is Positive. The Positive Outlook reflects Fitch's expectation of continued improvement in debt metrics and further strengthening of the policy framework over the next few years, including climate risk mitigants.

(Source: Fitch Ratings)