Fitch Affirms Jamaica’s Rating at B+; Outlook remains Stable

Fitch Ratings Agency, on Thursday, March 18, 2021, affirmed Jamaica’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B+’ with the outlook remaining Stable.

The rating action by Fitch reflected:

– A favourable business climate according to the World Bank Doing Business Survey;

– The expectation that Jamaica will be “one of the few Fitch-rated sovereigns to post a primary surplus for the fiscal year;

– A financing plan in which 70.0% of the Government’s funding requirements will be sourced locally; and

– A targeted fiscal surplus for FY2021/22 supported by the one-off dividend payment of JMD33 billion (1.5% of GDP) from the Bank of Jamaica.

According to the Release, Fitch expects the economy to grow by 4.5% in 2021 and 5.2% in 2022, underpinned by a smooth vaccine roll out; the mitigation of a possible third wave of the virus and the gradual return to normalcy in the tourism industry.

Additionally, Fitch projects debt-to-GDP to be 110.9% at end FY2020/21, an uptick from the 94.8% recorded at end FY2019/20. The Agency also projects the ratio to return to a clear downward trajectory, noting that the uptick is attributable mainly to a contraction in GDP and exchange rate depreciation over the period.

Minister of Finance and the Public Service, Dr. Nigel Clarke, in welcoming the rating action said, “The decision by international credit rating agency, Fitch, to maintain Jamaica’s credit rating at B+ and their affirmation of Jamaica’s outlook as “stable”, in the middle of the worst economic crisis in our history, is strong evidence of the value and benefit of good policy. Minister Clarke emphasized that policy matters, especially in response to a crisis, and with our commitment to continued execution of good policy, Jamaica will recover stronger.

FITCH AFFIRMS RATINGS

The stable outlook is supported by the Ratings Agency’s expectation that the public debt level will return to a downward trajectory, underpinned by the Government’s maintenance of a high primary surplus, the resilience of the country’s external finances, and stronger economic policy institutions.