Jamaica’s credit outlook was lowered to negative by Fitch Ratings, which cited the Caribbean island’s “high vulnerability” to external shocks and financing constraints after a plunge in central bank reserves.
“The sustained erosion of the country’s international liquidity position has sharply reduced the authorities’ maneuver capacity to manage external and fiscal pressures,” Fitch said in a statement today. “Growth underperformance poses serious challenges to sustained fiscal consolidation and debt sustainability.”
The yield on Jamaica’s dollar bonds maturing in 2019 rose 2 basis points, or 0.02 percentage point, to 8.40 percent at 1:26 p.m.
Jamaica’s $14.5 billion economy contracted 0.5 percent last year while international reserves fell by $832 million to $1.98 billion over the same period, according to Fitch. Growth will accelerate from 1 percent this year to 1.5 percent in 2017, the International Monetary Fund said in an October report, the slowest pace among 32 nations in Latin America and the Caribbean. Tourist arrivals fell in October and November from a year earlier.
The Jamaican dollar has also come under pressure as “domestic confidence slipped due to the delay in reaching a new agreement” with the IMF, Fitch said. The currency has tumbled 7.1 percent over the past 12 months.
Read More: Bloomberg.com