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JM | Nov 25, 2021

Moody’s maintains Jamaica’s credit rating at ‘B2’ with the outlook remaining stable

/ Our Today

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Expected that Jamaica’s debt burden will decline in 2021-22 with programmed primary balance of 6.0% of GDP during current fiscal year

Credit ratings agency Moody’s.

International credit ratings agency Moody’s Investors Service is maintaining Jamaica’s long-term issuer and senior unsecured ratings at ‘B2’ with the outlook remaining stable.

The decision to maintain the rating reflects Moody’s expectations that the deterioration in Jamaica’s debt metrics, caused by the effects of the COVID-19 pandemic will be temporary given Jamaica’s strong commitment to fiscal consolidation.

This is manifested in the expectation that Jamaica debt burden will decline in 2021-22 with the programmed primary balance of 6.0 per cent of gross domestic product (GDP) during the current fiscal year.

Bank of Jamaica, in downtown Kingston. (Photo: JIS)

In its latest assessment, published on Tuesday, Moody’s indicated that revenues have recovered quickly, noting that while the revenue intake benefited from a substantial dividend from the Bank of Jamaica, the normalisation of economic activity will support revenue returning to pre-pandemic levels by fiscal year 2022-23.

This normalisation has come about due to the easing of containment measures. The credit assessment is also based on Moody’s expectation that Jamaica will experience robust growth in calendar year 2021 with real GDP expanding 4.5 per cent, followed by another year of above normal growth in calendar year 2022 at 2.7 per cent.

Jamaica is expected to return to growth of around 2.0 per cent in subsequent calendar years. Maintaining the stable outlook is as a result of 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.

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