Standard and Poor’s upgrades Jamaica’s ratings

Jamaica’s long-term foreign and local currency rating has been upgraded from ‘B’ to ‘B+’ by ratings agency Standard and Poor’s (S&P).

News also came that S&P affirmed the ‘B’ rating yesterday on the short-term foreign and local sovereign credit ratings. The outlook remains ‘stable’.

S&P Global Ratings also raised its transfer and convertibility assessment to ‘B-’ from ‘B+’.

Standard and Poor’s said that the rating action reflected Jamaica’s sustained progress in achieving macroeconomic stability and strengthening its external liquidity, which improved the country’s ability to withstand external shocks.

Jamaica just concluded the final review of a three-year precautionary standby arrangement (SBA) with the International Monetary Fund (IMF), whose former managing director, Christine Lagarde, recently heaped praises on the country for successfully completing the SBA.

MAINTAINING GAINS

Standard and Poor’s also cited anticipated continuation of public-sector reforms and establishment of an independent fiscal council as critical factors to promote sustainable fiscal practices and deepen government accountability in a post-IMF standby arrangement environment.

The outlook was affirmed based on the Government’s willingness to continue maintaining robust primary fiscal surpluses, which will support a gradual reduction in debt and interest burdens and help to boost external reserves.

Furthermore, S&P expected that “the country will be able to maintain its growth momentum, with modest GDP growth, and that the Government will continue advancing towards a more effective monetary policy framework for the central bank, including a more flexible exchange rate”.

A two-member team from S&P visited the country in May to conduct the annual review.