Fitch Ratings revises Jamaica’s outlook to stable, affirms at B+
Kingston, Jamaica. (iStock photo)
Fitch Ratings on Friday, revised Jamaica’s outlook to “Stable” from “Positive”, while affirming its Long-Term Foreign-Currency Issuer Default Rating (IDR) at B+.
The rating agency indicated that the revised outlook reflected the shock to Jamaica from the on-going global coronavirus (COVID-19) health crisis.
Due to the pandemic, the country will experience a sharp contraction in its main sources of foreign currency revenues: tourism, remittances and alumina exports, Fitch indicated.
The rating agency forecasts that the gains made in keeping the Government’s debt/GDP on a downward trend will be disrupted.
To this end, Fitch expects the economy to contract by four per cent in 2020, but, will recover in 2021 with an estimated growth of two per cent.
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 amortization profile for the next couple of years”.
Dr Nigel Clarke, Minister of Finance and the Public Service, in commenting on the rating action said, “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.”
The Government of Jamaica has responded by cushioning the impact of the COVID-19 fallout by implementing a $10.0 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.