Durrant Pate/Contributor

NCB Capital Markets says given its recent fiscal and economic performance, Jamaica is cruising toward stronger creditworthiness.

NCB Capital Markets notes that, “Jamaica’s recent strides in prudent fiscal management and debt reduction have paved the way for its improved creditworthiness among international rating agencies. Fitch is the last of the big three international rating agencies to upgrade Jamaica’s credit rating to BB-, following S&P’s (BB-/Stable) and Moody’s (B1/ Positive) upgrade in September and October of 2023, respectively.”

In its latest capital market bulletin, NCB Capital Markets says the upgrades reflect the government’s strides in reducing debt levels through robust fiscal frameworks and a dedication to maintaining and growing primary surpluses. In addition, the consistent reductions in the debt-to-GDP ratio over the past decade, alongside forecasts of further reductions, signal that recent policies have put the country on a sustainable fiscal trajectory. 

Expectations for ongoing enhancements in debt metrics 

NCB Capital Markets commented that Fitch’s positive outlook for Jamaica “underscores expectations for ongoing enhancements in debt metrics and policy frameworks, thereby reinforcing even more favourable prospects for Jamaica’s creditworthiness.” 

Emboldened by the recent successes, the capital market player posits that one has to ponder, what will it take for Jamaica to increase its credit rating even further? 

NCB Capital Markets assesses that “the potential for an upgrade in Jamaica’s credit ratings hinges on several key factors highlighted by credit rating agencies S&P, Fitch and Moody’s such as sustained and robust economic growth, which is crucial for potential upgrades. Additionally, all three agencies emphasize the importance of reducing the government debt-to-GDP ratio and interest burden over the medium term, bringing it closer to peer averages. 

This reduction in debt burden and affordability, coupled with higher-than-anticipated real GDP growth, as highlighted by Moody’s, the capital market player sees as essential drivers for exerting upward pressure on Jamaica’s credit ratings emphasizing that still, Jamaica has clearly done some things right. 

The country has managed to churn out a fiscal surplus, reduce unemployment levels, and create more favourable debt servicing costs relative to higher-rated peers. Looking ahead, maintaining sustained efforts to diversify the economy, fortify governance structures and uphold fiscal discipline, NCB Capital Markets concludes, ”will be crucial for Jamaica to sustain its trajectory toward enhanced creditworthiness.”