October 19, 2023
Moody’s Investors Service has raised Jamaica’s long-term issuer and senior unsecured ratings from ‘B2’ to ‘B1,’ with a revised outlook of ‘Positive.’ This rating upgrade acknowledges Jamaica’s unwavering commitment to sustainable fiscal policies, which allowed the country to reverse the increase in debt levels caused by the COVID-19 pandemic. Government debt has significantly decreased, dropping over 30 percentage points to 78% in 2022 from the peak of 110% in 2020, and this downward trend is expected to persist. The change in outlook to ‘Positive’ reflects Moody’s assessment that Jamaica’s sustained positive fiscal trajectory, resulting from reforms aimed at enhancing fiscal, monetary, and economic policy effectiveness, will further bolster the nation’s credit resilience.
Continued improvement in debt burden and debt affordability will put additional upward pressure on the rating. Higher-than-projected real GDP growth that signals increased economic competitiveness would also generate upward rating pressures, as it would accelerate the improvement in government debt metrics further increasing the resilience of the economy to shocks. Conversely, a downgrade of the rating is unlikely given the positive outlook. However, a likely deterioration in government debt metrics would weaken the prospects for an upgrade and if not reversed would put downward pressure on the rating. Increased external vulnerability reflected by a decline in the international reserve buffer, and severe weather-related events that significantly strain government finances affecting the sovereign’s ability to service debt could also trigger negative rating actions.
In response to this rating upgrade, Dr. Nigel Clarke, Jamaica’s Minister of Finance and the Public Service, underscored the effectiveness of the government’s economic policy framework. He emphasized the framework’s unwavering principles and discipline, even in the face of significant challenges like the COVID-19 pandemic, which has ultimately strengthened the Jamaican economy. This achievement underscores the importance of preserving and maintaining these economic gains, making Jamaica an attractive destination for investment and supporting job creation and growth.
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