By Anthony Henry

S&P Global Ratings has affirmed Jamaica’s sovereign credit ratings, maintaining the country’s transfer and convertibility assessment at BB+, despite the severe economic fallout from Hurricane Melissa.

In a rating action dated December 18, 2025, S&P revised Jamaica’s outlook to stable from positive and affirmed the country’s ‘BB’ long-term and ‘B’ short-term foreign and local currency sovereign credit ratings. The agency said the likelihood of a ratings upgrade over the next 12 months has become more remote following the damage caused by Hurricane Melissa and its impact on economic growth and public finances.

Hurricane Melissa, which made landfall on Tuesday, October 28 as a Category 5 storm, caused an estimated US$8.8 billion in damage, equivalent to about 40 per cent of Jamaica’s 2024 GDP. Roughly one-third of the damage was to infrastructure. S&P said the scale of the destruction will weigh heavily on near-term growth and require increased government spending to support recovery and rebuilding.

Despite these pressures, the agency said Jamaica’s solid institutions, preparedness for external shocks and the expectation of an economic rebound support the current ratings. The stable outlook reflects S&P’s view that the government will prudently manage recovery efforts within a strong institutional framework, even as the country remains inherently vulnerable to external shocks.

S&P expects economic growth to contract sharply in the near term, with the impact of the hurricane likely reaching double digits in the fourth quarter of 2025 and continuing into early 2026. However, the agency anticipates a gradual recovery as rebuilding accelerates, particularly in tourism and agriculture. Overall GDP is expected to contract by 2 per cent in 2025 and by 1.8 per cent in 2026, before growth averages about 3 per cent in 2027 and 2028.

The tourism sector, which accounts for as much as 30 per cent of GDP when indirect effects are included, has already seen about 70 per cent of hotel operators return to operations, along with all major cruise ports and airports. S&P expects close to 80 per cent of hotels to be operational by the end of January 2026, supporting the broader economic recovery.

On the fiscal side, S&P said higher rebuilding costs and weaker growth will temporarily widen government deficits and push net general government debt higher. Net debt is expected to rise to about 55 per cent of GDP by next year from 49 per cent last year, before resuming its long-term decline to around 50 per cent by 2028. The agency expects Jamaica to return to prudent fiscal management as recovery takes hold, with deficits falling below 1 per cent of GDP and primary surpluses exceeding 4 per cent of GDP toward the end of the forecast period.

S&P pointed to Jamaica’s strong track record of fiscal discipline, noting that it is the only sovereign it rates that has recorded primary fiscal surpluses above 3 per cent of GDP for 10 consecutive years, despite repeated external shocks. The agency also highlighted bipartisan consensus on macroeconomic policy and debt reduction, as well as improvements in institutional strength, including the enhanced independence of the Bank of Jamaica.

The agency said Jamaica’s extensive disaster risk financing framework has strengthened its ability to respond to shocks, citing access to insurance payouts, catastrophe bonds, contingency funds and contingent credit facilities, alongside a US$3.6 billion support package from multilateral lenders. These resources, S&P said, provide critical support during the recovery phase, even as the country remains exposed to weather-related risks.

S&P warned that ratings could come under pressure if fiscal discipline weakens or if the economy fails to recover as expected over the medium term. Conversely, an upgrade could occur if debt metrics improve more quickly than anticipated and economic growth rebounds faster and more strongly than forecast.

Overall, S&P said Jamaica’s ability to absorb the shock from Hurricane Melissa while maintaining its BB+ assessment reflects strengthened institutions and policy credibility, even as the storm has delayed the country’s near-term credit momentum.