Durrant Pate/Contributor

International credit ratings agency Fitch has affirmed Jamaica’s long-term foreign-currency issuer default rating at ’BB-’ and revised its outlook to stable from positive following the impact of Hurricane Melissa three weeks ago.

The ’BB-’ rating is supported by World Bank governance indicators and is substantially stronger than the bank’s ’BB’ median with GDP per capita above the ’BB’ median. Jamaica maintains international reserves covering 6.6 months of current external payments (US$6.2 billion), comparing favorably to the ’BB’ median of 4.8 months.

The outlook revision reflects significant damage from the category five storm, which Fitch expects will lead to economic contraction and require substantial reconstruction costs. The World Bank, working alongside the Inter-American Development Bank (IDB), estimates that Hurricane Melissa caused approximately US$8.8 billion in physical damage to Jamaica. 

This figure is equivalent to 41 per cent of the country’s 2024 GDP and represents the most costly hurricane in Jamaica’s recorded history.

Fitch forecasts the domestic economy will contract by 1.5 per cent in 2025 before showing a modest recovery of 1.8 per cent in 2026. Tourism receipts could decline by 15 per cent year-over-year in both 2025 and 2026, with potential for steeper drops if large hotels remain closed beyond February 2026.

The rating affirmation considers mitigating factors, including insurance and contingency funds (nearly US$250 million combined), multilateral credit lines (nearly US$384 million), and expected private insurance flows (estimated between US$1 billion-US$2.5 billion). 

Fiscal rules suspended for two years

Jamaica’s government has suspended its fiscal responsibility law for the next two years. Fitch expects the general government balance to swing to significant deficits, projecting a 3.2 per cent of GDP deficit for fiscal year 2025 from a 0.2 per cent surplus in fiscal year 2024, with further widening in fiscal year 2026 as reconstruction spending increases.

The debt-to-GDP ratio is expected to rise to nearly 68 per cent by end-2026, interrupting the previous downward trend. Fitch believes the government remains committed to reducing its debt burden once reconstruction efforts are complete. Jamaica’s current account is forecast to move into deficit in 2026 from a 3.1 per cent of GDP surplus in 2024, as falling tourism receipts and mining exports are partially offset by rising remittances.