Wed | Dec 1, 2021

Moody’s affirms Jamaica’s credit rating, maintains stable outlook

Published:Wednesday | November 24, 2021 | 10:20 AM
The decision to affirm the rating reflects expectations that the deterioration in Jamaica’s debt metrics, caused by the effects of the COVID-19 pandemic, is temporary given the country’s strong commitment to fiscal consolidation.

Ratings agency Moody's Investors Service on Tuesday affirmed Jamaica's long-term issuer and senior unsecured ratings at 'B2' with the outlook remaining stable.

The decision to affirm the rating reflects expectations that the deterioration in Jamaica's debt metrics, caused by the effects of the COVID-19 pandemic, is temporary given the country's strong commitment to fiscal consolidation.

Moody's expects Jamaica debt burden to begin declining in 2021/22 with the programmed primary balance of 6.0% of Gross Domestic Product (GDP)  this fiscal year.

Additionally, Moody's indicated that the Government revenues have recovered quickly, and while the revenue intake benefited from a substantial dividend from the Bank of Jamaica “the easing of containment measures and normalisation of economic activity will support revenue returning to pre-pandemic levels by fiscal year 2022/23”.

Moody's expects Jamaica to experience robust growth in calendar year 2021, with real GDP expanding 4.5%, followed by another year of above normal growth in calendar year 2022 at 2.7%, before subsequently returning to growth of around 2.0% in subsequent calendar years.

Maintaining the stable outlook reflects Moody's estimation that the pace of economic recovery will continue to be predicated on the performance of the tourism sector, and the economy's vulnerability to weather-related shocks.

Overall, Moody's expectation for a return to pre-pandemic fiscal trends of large primary surpluses and declining government debt ratios rests on the authorities' continued adherence to the medium-term debt targets.”

Reacting Minister of Finance Dr Nigel Clarke stated, “Moody's decision to affirm Jamaica's credit rating and to maintain the outlook as stable, despite the sharp increase in our debt ratio as a result of the pandemic, is demonstration of confidence in Jamaica's fiscal programme, our economic recovery and belief in the resilience of our economy.”

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