Jamaica's economy still steady

NEW YORK (CMC):

A major international credit rating agency says Jamaica's economic outlook remains stable.

Standard & Poor's Ratings Services affirmed its 'B-' long-term and 'C' short-term sovereign credit ratings on the Caribbean island.

It said Jamaica's '3' recovery rating, and 'B' transfer and convertibility assessment is 'unchanged'.

"Jamaica's fiscal position modestly improved after the Government concluded its fiscal debt exchange and signed an agreement with the International Monetary Fund (IMF)", said Standard & Poor's in a statement.

"A package of new fiscal measures has been implemented. However, the country's debt and interest burden remains one of the highest of all rated sovereigns. We have affirmed all of the ratings on the sovereign."

Improved fiscal position

Standard & Poor's said that the ratings on Jamaica reflect the "modestly improved fiscal position after the government concluded its distressed debt exchange (JDX) in February 2010."

Standard & Poor's credit analyst Roberto Sifon Arevalo said interest payments were reduced from 63 per cent of general government revenue in 2009 to an anticipated 42 per cent in 2010.

"We expect the general government deficit to remain high at 8.4 per cent of GDP (gross gomestic product) in fiscal 2010 due slow growth and recon-struction costs after severe rains hit Jamaica in September 2010," he said.

Arevalo urged the Bruce Golding administration to implement a 'medium-term strategy' to alleviate the debt burden.

He said this would consequently enhance the primary fiscal balance and economic growth, which are essential in improving the overall rating.

"This is especially the case, given that the IMF agreement is due to terminate in August 2012, just a few months ahead of general elections," Arevalo said.

"If the Government is not able to implement a sustainable economic plan, we would likely lower the rating," he said, adding "conversely, if the Government is able to improve its fiscal stance through a credible medium-term economic plan, creditworthiness could improve".

"A package of new fiscal measures has been implemented. However, the country's debt and interest burden remains one of the highest of all rated sovereigns. We have affirmed all of the ratings on the sovereign."