The Private Sector Organisation of Jamaica acknowledges Fitch Ratings’ recent affirmation of Jamaica’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at‘BB-’ with a Positive Outlook, announced on February 21, 2025.

“This reaffirmation underscores the resilience of Jamaica’s economic fundamentals and the government’s steadfast commitment to prudent fiscal and monetary policies,” the PSOJ said.

The PSOJ said Jamaica’s rating upgrade from ‘B’ to ‘BB-’ on March 5, 2024, marked a significant milestone, reflecting improved fiscal discipline, a declining debt-to-GDP ratio, and the strength of key institutions. “The latest decision to maintain this rating signals continued confidence in the nation’s ability to sustain macroeconomic stability despite challenges such as last year’s economic downturn following Hurricane Beryl [o July 3, 2024],” the PSOJ added.

What contributed to the affirmation?

The affirmation of ‘BB-’ is largely attributed to the following factors:

• Strong Fiscal Management: The government has maintained large primary surpluses, with the primary surplus projected to shrink to 5% of GDP in fiscal 2024/25 from 5.7% of GDP in fiscal 2023/24.
• Stable Policy Framework: Jamaica’s commitment to an inflation-targeting monetary policy and fiscal discipline has enhanced credibility among investors and rating agencies.
• Resilience in External Balances: Jamaica’s external balance sheet has strengthened, with net sovereign external debt projected to fall below 10% of GDP in 2025 from a high of 41.6% in FY 2015/2016.
• Improved Revenue Generation: Revenue is forecasted to grow by 9% year-over-year, driven by improvements in tax administration and labour market strength.

What does this mean for Jamaica?

The affirmation of ‘BB-’ reinforces that Jamaica’s economic policies remain on the right track. The country’s declining debt trajectory is projected to fall to 66.3% of GDP in fiscal 2025/26 from 70.8% this year, positioning closer to the medium-term target of 60% by fiscal 2027/28. The government’s ability to generate primary surpluses, combined with effective tax administration and revenue growth, further supports economic resilience.

The PSOJ recognizes the importance of stable and predictable economic policies, especially with the upcoming parliamentary elections in 2025. The broad consensus on Jamaica’s fiscal framework across political parties reduces uncertainty, fostering greater investor confidence and stability in financial markets.

Impact on businesses! 

Fitch’s reaffirmation of Jamaica’s credit rating has direct and indirect implications for businesses:

• Lower Borrowing Costs: A stable rating can help maintain favourable interest rates on sovereign debt, which translates to lower financing costs for businesses seeking credit for expansion.
• Increased Investor Confidence: With foreign direct investment averaging close to 3% of GDP, a strong credit outlook makes Jamaica more attractive to both local and international investors.
• Exchange Rate Stability: A sustained BB- rating supports currency stability, reducing the risk of sharp fluctuations that could impact import costs and business operations.
• Macroeconomic Stability: The government’s fiscal prudence ensures a stable economic environment, allowing businesses to plan long-term investments with greater certainty.

How Jamaica Can Further Improve Its Credit Rating?

To move towards a higher credit rating, Jamaica must continue to address the following areas:

• Further Debt Reduction: Continued focus on lowering debt levels closer to the ‘BB’ median of 55.6% of GDP will enhance creditworthiness.
• Structural Economic Reforms: Policies aimed at improving productivity, labour force participation, and innovation can increase growth potential.
• Crime Reduction Initiatives: A continued focus on addressing crime and security challenges can improve the business climate and attract more foreign direct investment.
• Climate Resilience Measures: Strengthening disaster preparedness and implementing climate adaptation strategies will mitigate external risks and economic disruptions.

Challenges and the Path Forward!

While Jamaica’s economic trajectory remains positive, challenges persist, including low productivity, government bureaucracy, and vulnerability to external shocks such as climate-related disasters. The PSOJ encourages continued investment in human capital development, infrastructure, and public safety reforms to address these structural weaknesses and further enhance Jamaica’s growth potential.

The PSOJ remains committed to working with the government, private sector stakeholders, and international partners to build a robust economic environment that fosters business growth and resilience.