Fitch revises Jamaica’s outlook to stable, affirms B+ rating
Published:Friday | April 10, 2020 | 10:41 AM
Rating agency Fitch today revised Jamaica’s outlook to ‘stable’ from ‘positive, while affirming the country’s long-term foreign-currency issuer default rating (IDR) at B+.
Fitch says the revised outlook reflected the shock to Jamaica from the ongoing global coronavirus (COVID-19) health crisis.
Fitch indicated that due to the pandemic, Jamaica will experience a sharp contraction in its main sources of foreign currency revenues: tourism, remittances and alumina exports.
The rating agency forecasts that the gains made in keeping the Government’s debt/GDP on a downward trend will be disrupted.
Fitch expects the economy to contract by 4.0% in 2020, but will recover in 2021 with estimated growth of 2.0%.
Fitch highlighted that Jamaica had other mitigating factors to help cushion the impact on the economy.
These include “a balanced budget in FY19/20, liquid local sources of financing, a reasonable foreign reserve position, strong relations with international financial institutions and a benign debt amortisation profile for the next couple of years”.
Reacting to the news, Finance Minister Dr Nigel Clarke, says the COVID-19 pandemic will deliver a massive economic shock to Jamaica.
“In that context, Fitch’s decision to maintain Jamaica’s credit rating at B+, when many sovereigns’ credit ratings are being downgraded globally, says something about Jamaica’s economic resilience. This is a challenging time for our economy, however, Jamaica has options that many countries do not have.”
He noted that the government has responded by cushioning the impact of the COVID-19 fallout by implementing a $10-billion spending stimulus under the COVID Allocation of Resources for Employees (CARE) Programme.
The CARE programme is a temporary cash transfer programme aimed at cushioning the economic impact of COVID-19 for small and micro businesses and individuals, particularly those most vulnerable.
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