Another of America’s leading rating agencies, Moody’s, has maintained Jamaica’s B (stable) rating, in its latest update issued yesterday (February 23).Moody’s says: “The outlook for all ratings is stable, reflecting a balance between ongoing efforts at fiscal consolidation and the vulnerability of the country to external shocks”.
The agency cites Jamaica’s strengths as – a commitment to fiscal discipline, proven ability to face severe shocks and comparatively low external Government debt ratios.
Among the challenges which Jamaica faces, according to the rating agency, is a closely managed exchange rate that is subject to severe recurrent pressures and a large public sector debt burden with growing exposure to international capital markets.
The agency notes that the economy as well as the fiscal and external positions remain sensitive to external and domestic shocks. It further observes that, “they remain supported by the Government’s commitment to return to a balanced budget position and by a constitutional provision mandating debt-service payments as the first expenditure priority”.
Moody’s, which influences the behaviour of international institutional investors, says despite Jamaica’s recent adverse external developments and a downturn in the local business sentiment, “confidence in the medium-term programme and in the ability of the policymakers has remained somewhat intact, as evidenced by the relative stability of the foreign exchange market, notwithstanding some bouts of pressure”.