MOODY’S Investors Services has maintained its B3 rating for Jamaica, but has shifted its outlook on the country from stable to positive, the ratings agency announced last Friday.
The international ratings agency said the key drivers for the improvement were ongoing fiscal consolidation which, if sustained, supports continued reduction in Government debt burden, as well as an improving institutional capacity and policy effectiveness.
“The affirmation of the B3 rating captures the authorities’ commitment to continued fiscal consolidation, implementation of structural reforms, progress in lowering Government debt ratios, and reduced external vulnerabilities,” Moody’s said, noting “these credit strengths are set against the very high Government debt ratios, large interest burden, and low GDP growth rates”.
Giving its rationale on the improved outlook, Moody’s said it believes the “Government is likely to run sizeable primary surpluses of some 7.0 per cent of GDP and to report a broadly balanced fiscal accounts”.
It added that it sees Government debt falling to around 100 per cent of GDP by FY2018/19, down from 105 per cent in FY2017/18, and anticipates further declines in subsequent years.
“The Jamaican authorities have shown a strong commitment to fiscal consolidation,” Moody’s stated, noting that spending on wages and interest declined to 59 per cent of Government revenue in FY2017/18, down from 80 per cent in FY2012/13.
Moody’s noted that the Jamaican Government had broadened the tax base, increasing tax revenue collection to 26 per cent of GDP in FY2017/18 up from 24 per cent in FY2012/13.
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