S&P Upgrades Jamaica’s Credit Rating from Stable to Positive

Jamaica has received another boost in its international credit rating, with Standards and Poor’s Financial Services, moving the country’s rating from stable to positive.

This is the second international credit rating agency that has given Jamaica improved ratings in recent months.

In July, Moody’s Investor Services also upgraded Jamaica from stable to positive.

Standard and Poor’s says another upgrade could be coming for Jamaica in the next twelve months.
It’s a glowing report from one of the world’s most respected credit rating agencies – Standard and Poor’s.

It begins, “After many years of economic, fiscal, and monetary reforms, Jamaica has made material progress in achieving macroeconomic stability and improvement in its external debt burden.”

As a result, S&P says they’re revising their outlook from stable to positive, and affirming the country’s short and long-term sovereign credit ratings at B.

The agency says the positive outlook reflects the at least one-in-three likelihood of another upgrade in the next 12 months.

But it says that would depend on Jamaica further strengthening its external liquidity position while maintaining tight fiscal policy, high primary surpluses, and modestly positive real GDP growth.

A big part of that will be bringing the debt to GDP ratio below 100-percent – a huge milestone that Finance Minister Dr. Nigel Clarke says will be achieved by the end of this financial year in March.

It’s been nearly two decades since Jamaica’s debt has exceeded the country’s total national output. And, that’s the rub.

Although the best its been this century, 100-percent debt to GDP is still alarmingly high.

S&P says this high debt burden has continued to limit their ratings for Jamaica.

And, they note that despite a recent slow pickup, GDP growth remains low.

Nevertheless, the agency says the government’s tight fiscal stance fosters macroeconomic stability–including low inflation–and supports the country’s creditworthiness.

S-and-P says it expects the government will continue to meet strict fiscal targets, and maintain its commitment to a gradual reduction in its debt and interest burdens.

They also expect that the government will continue advancing toward a more effective monetary policy framework for the central bank, including, notably, a more flexible exchange rate.

However, the agency says it could reverse the outlook if the government misses its fiscal targets.

Importantly, S&P says they believe this stability will remain, even through the next election cycle, due in 2021.

That’s because there’s been bipartisan support for fiscal reform.

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