Fitch revises Jamaica’s outlook to stable, affirms at B+
Fitch rating agency has revised Jamaica’s outlook to “Stable” from “Positive”, while affirming its long-term foreign currency issuer default rating at B+.
The rating agency indicated that the revised outlook reflected the shock to Jamaica from the ongoing global novel coronavirus disease (COVID-19) health crisis, adding that due to the pandemic, the country will experience a sharp contraction in its main sources of foreign currency revenues — tourism, remittances and alumina exports.
A news release from the Ministry of Finance said Fitch “forecasts that the gains made in keeping the Government’s debt-to-GDP on a downward trend will be disrupted”. As such, the rating agency expects the economy to contract by 4.0 per cent in 2020 but will recover in 2021 with estimated growth of 2.0 per cent.
Fitch also highlighted that Jamaica had other mitigating factors to help cushion the impact on the economy. These include a balanced budget in the financial year 2019/2020, liquid local sources of financing, a reasonable foreign reserve position, strong relations with international financial institutions, and a benign debt amortisation profile for the next couple of years.
“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,” the release quotes Finance Minister Dr Nigel Clarke.
“This is a challenging time for our economy. However, Jamaica has options that many countries do not have,” Dr Clarke added.
The ministry pointed out that the Government has responded to the crisis by implementing a $10-billion spending stimulus under the COVID Allocation of Resources for Employees (CARE) Programme — a temporary cash transfer initiative aimed at cushioning the economic impact of COVID-19 for small and micro businesses, and individuals, particularly those most vulnerable.
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