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Investing.com -- Fitch Ratings has affirmed Jamaica’s Long-Term Foreign-Currency Issuer Default Rating at ’BB-’ and revised its outlook to stable from positive following the impact of Hurricane Melissa.
The outlook revision reflects significant damages from the hurricane, which Fitch expects will lead to economic contraction and require substantial reconstruction costs. Government estimates put economic damages at around 30% of GDP ($6 billion-$7 billion), though these figures are preliminary.
Fitch forecasts Jamaica’s economy will contract by 1.5% in 2025 before showing modest recovery of 1.8% in 2026. Tourism receipts could decline by 15% year-over-year in both 2025 and 2026, with potential for steeper drops if large hotels remain closed beyond February 2026.
The rating affirmation considers mitigating factors including insurance and contingency funds (nearly $250 million combined), multilateral credit lines (nearly $384 million), and expected private insurance flows (estimated between $1 billion-$2.5 billion).
Jamaica’s government has suspended its Fiscal Responsibility Law for the next two years. Fitch expects the general government balance to swing to significant deficits, projecting a 3.2% of GDP deficit for fiscal year 2025 from a 0.2% surplus in fiscal year 2024, with further widening in fiscal year 2026 as reconstruction spending increases.
The debt-to-GDP ratio is expected to rise to nearly 68% by end-2026, interrupting the previous downward trend. Fitch believes the government remains committed to reducing its debt burden once reconstruction efforts are complete.
Jamaica’s current account is forecast to move into deficit in 2026 from a 3.1% of GDP surplus in 2024, as falling tourism receipts and mining exports are partially offset by rising remittances.
The ’BB-’ rating is supported by World Bank Governance Indicators substantially stronger than ’BB’ medians, GDP per capita above the ’BB’ median, moderate inflation, and the country’s floating exchange rate. Jamaica maintains international reserves covering 6.6 months of current external payments ($6.2 billion), comparing favorably to the ’BB’ median of 4.8 months.
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