In a release on Sept. 19, Standard and Poor’s says it has affirmed its ‘B-’ long-term foreign and local currency and ‘B’ short-term foreign and local currency sovereign credit ratings on Jamaica.
A ‘B’ rating means the country is more vulnerable to adverse business, financial and economic conditions, but currently has the capacity to meet financial commitments.
The rating agency cites improvements in the country’s external liquidity, a return to economic growth and the government’s success in meeting its fiscal targets under the four-year International Monetary Fund (IMF) program as reasons for the upgrade.
It further says its long-term rating from stable to positive reflects the possibility of another upgrade for the country in the next six to 18 months.
This will come if the country improves its external liquidity position, if gross domestic product (GDP) continues to grow and if Jamaica achieves greater fiscal credibility as a result of reaching budget targets.
In its outlook on the Jamaican economy, S&P says it expects that the economy could grow higher than 1 percent this year, and possibly 2 to 3 percent in future years and that the current account deficit could decline below 7 percent of GDP in 2014.
This is in keeping with recent projections made by the Planning Institute of Jamaica (PIOJ) that the economy is likely to grow up to 3 percent in 2015-16.
However, the rating agency says Jamaica remains vulnerable to hurricanes because of its location in the hurricane belt, but continues to enjoy a stable democracy and open political system, which is essential for investor confidence.