Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says Standard and Poor’s (S&P) decision to maintain Jamaica’s ‘B+’ credit rating, represents the agency’s confidence in the economy and the direction of the Government’s economic policy, against the background of the novel coronavirus (COVID-19) pandemic.
A Ministry statement, on Wednesday (December 9), indicated that S&P’s maintaining of the rating, albeit with a ‘Negative’ outlook, reflects its analysis of Jamaica’s economic and financial realities arising from COVID-19 and government interventions to minimise the effects.
The statement noted that despite the adverse outcomes, including disruption in sectors such as tourism, which has contributed to a contraction in growth, “S&P, in their analysis, expects the country to return to fiscal surpluses in the short-term due to the Government’s demonstrated commitment to prudent fiscal policy management”.
Speaking at a media briefing at the Ministry on Thursday (December 10), during which he provided an update on the economy, Dr. Clarke, who described S&P’s decision as “significant”, said it was largely in recognition of measures, primarily institutional strengthening, to bolster the economy’s ability and flexibility to respond to shocks resulting from COVID-19.
Engagements to this end, include establishment of the Public Investment Map that provides a transparent window into the Government’s capital programme; passage of the Bank of Jamaica (Amendment) Act, 2020, aimed at modernising and strengthening the Central Bank’s operations by improving its governance framework; and tabling of legislation to establish an Independent Fiscal Commission that will serve as a guardian and interpreter of Jamaica’s fiscal rules.
“It’s also… recognition of the fact that we would have entered this [pandemic] crisis with significant buffers. I’ve made mention of the fact that we accumulated cash resources of approximately four per cent of gross domestic product (GDP), due to fiscal overperformance over the last few years due [in part] to a reintegration of [several] public bodies… and divestment of State-owned enterprises,” Dr. Clarke noted.
The Minister said the fact that S&P has “seen it fit” to maintain the country’s credit rating in the middle of what he described as “the worst economic crisis in 90 years, was also a sign that “good policies pay good dividends”.
“What we want to ensure is that the policies we pursue are such that, in lean times, we have the policy flexibility to respond to economic downturns in a way that shortens those downturns, cushions the impact, and returns Jamaica to a path of expansion in the quickest possible time,” Dr. Clarke argued.
Jamaica first attained the S&P ‘B+’ rating in September 2019, making it the highest credit ranking ever achieved on the country’s long-term foreign currency and local currency bonds, in the 20 years the agency has been rating these instruments.