S&P rating agency upgrades Jamaica

International ratings agency Standard & Poor\'s has raised its sovereign foreign currency debt rating on Jamaica to B-minus from selective default with a stable outlook.



The latest upgrade follows the success of the government’s debt exchange programme.



It also comes just over a week after another rating agency, Fitch upgraded the country’s long-term local and foreign currency Issuer Default Ratings (IDR) to B minus.



Earlier this week, the finance minister, Audley Shaw reported a 99 per cent participation by bondholders.



Under the Jamaica Debt Exchange Programme, the government offered to exchange all of its domestic debt of approximately $700 billion, for longer-dated, lower-yielding securities as part of a plan to shore up the economy.



In a statement issued yesterday, Standard and Poors said future sovereign rating actions will depend on its view of the government\'s ability to benefit from interest cost savings and smoother debt amortization.



Multilateral assistance to address the country’s many fiscal rigidities and inefficiencies and efforts to decrease its high debt burden will also determine future ratings by S&P.



The ratings agency says it believes Jamaica\'s fiscal performance may improve this year as the government tries to implement a series of fiscal reforms in line with the conditions established by the International Monetary Fund\'s (IMF) loan agreement earlier this month.



The firm also says it still expects the pace of recovery in the real economy to be slow, with gross domestic product forecast to grow 0.5 per cent this year versus a contraction of 3.5 per cent last year.



In addition to the IMF loan agreement, on Tuesday the World Bank approved a US$200 million loan to help Jamaica\'s fiscal and debt reforms.