S&P upgrades Jamaica’s sovereign credit rating, outlook remains stable

Standard and Poor's Ratings Agency (S&P) has raised Jamaica’s sovereign credit rating to 'B+' from 'B', with a stable outlook.

In the rating put out this afternoon, S&P also affirmed Jamaica’s 'B' short-term foreign and local currency sovereign credit ratings.

It also raised its transfer and convertibility assessment to 'BB-' from 'B+'.

The international rating agency outlined that Jamaica has made material progress in achieving macroeconomic stability and strengthening the country’s external position, thereby improving its ability to withstand external shocks.

Additionally, it says the stable outlook reflects the agency’s expectation that Jamaica will continue to bolster its fiscal resilience through continued public-sector reform, a declining debt burden, and will generate modest real Gross Domestic Product growth.

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See more information below on the improved rating:

Outlook

The stable outlook reflects our view that, in the next 12 months, Jamaica's fiscal policy will remain broadly consistent following the expiry of its IMF Stand-by Arrangement in November 2019.

We expect that the government will continue to deliver robust primary fiscal surpluses, leading to a gradual reduction in debt and interest burdens, and helping to boost external reserves.

We also expect that the country will be able to maintain its growth momentum, with modest GDP growth, and that the government will continue advancing toward a more effective monetary policy framework for the central bank, including a more flexible exchange rate.

Upside scenario

We could raise the ratings if, over the next couple of years, higher and sustained economic growth strengthens Jamaica's economic profile. In addition, continued strengthening and effectiveness of monetary policy could bolster Jamaica's resilience to unexpected setbacks, including external shocks, leading to an upgrade.

Downside scenario

Poor economic growth or a weather-related shock that leads to a reversal in the improving trajectory of Jamaica's external position could result in higher external financing needs or a significant decline in usable foreign exchange reserves. Absent corrective fiscal and other measures we could lower the rating in such a scenario.

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