Standard and poor’s Global Ratings has affirmed the Government of Jamaica’s Long-Term Foreign and Local-Currency Issuer Default Rating (IDR) at ‘B+’ with the outlook remaining negative.
The agency considered the country’s economic and financial realities arising from the COVID-19 pandemic and the actions undertaken by the Government of Jamaica (GOJ) to mitigate the economic vagaries.
The onset of the pandemic led to severe disruption in some productive sectors, particularly the Tourism.
It also negatively impacted the trend of fiscal surpluses garnered over the past few years, resulting in the country posting a fiscal deficit in 2020.
However, despite the adverse outcomes, S&P, in their analysis, expects Jamaica to bounce back in 2021 but sees full recovery in FY2022/2023.
It also highlighted the mandate given to the government in the recently held general election.
This action in their view will continue to support the accomplishment of macroeconomic stability through a continued commitment to fiscal responsibility and consolidation.
In commenting on the rating, Dr. Nigel Clarke, Minister of Finance, and the Public Service said, “The affirmation of Jamaica’s credit rating at B+ is a sign of confidence in Jamaica’s future. We entered the pandemic with significant fiscal buffers, which provided us with the flexibility to absorb and respond to the crisis without affecting medium term economic prospects. As such, as S&P forecasts, Jamaica is poised to return to economic growth in the fiscal year 2021/22 although achieving pre-COVID levels of economic output will occur in the medium term.”
The Minister further stated that “the fact that we are continuing to strengthen, build, and entrench economic institutions in the middle of the pandemic, through modernizing our central bank and making it independent, launching a public investment map and tabling the Bill to establish an Independent Fiscal Commission is a real show of strength. These institutions will enhance transparency and accountability in the implementation of fiscal and monetary policy. These are important to enhance policy credibility long into the future.”
S&P emphasized that if there are prolonged deficits at current elevated levels or weaker external accounts due to economic recovery being weaker than expected, then there is a possibility for lowered ratings.
However, consideration to revising the outlook to stable will be given if “risks of a more severe or prolonged outbreak were to subside and the country’s public finances begin returning to previous levels.”
Readers Bureau, Contributor
Edited by Jesus Chan
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