Jamaica’s credit rating was upgraded one level by Moody’s Investors Service, which cited the government’s commitment to fiscal reform and cutting one of the world’s highest debt loads.
Moody’s raised the country’s bond rating to Caa2 from Caa3 and said $14 billion economy should grow more robustly in the next two to three years. The economy grew 0.3 percent in the first quarter, after two consecutive quarters of contraction, the Planning Institute of Jamaica said last week.
Two years after it restructured some debt and signed on to a four-year International Monetary Fund financing package, the the government is cutting spending and pursuing structural reforms. Government debt compared to gross domestic product reached around 140 percent in 2014, according to the World Bank, which said the rate is among the highest in the developing world. Moody’s said it expects the debt ratio to fall to less than 100 percent by 2020, approaching the government’s target of 96 percent within the next five years.
“Despite persistently low economic growth and high debt burden, two factors that constrain Jamaica’s rating, the authorities have made substantive progress towards completing their fiscal consolidation program,” Moody’s Senior Analyst Samar Mazaid wrote in a note. “They have introduced tax and expenditure reform measures, and maintained a large primary surplus of 7.5 percent over the past two years.”
The yield on the country’s 2025 bonds fell one basis point to 6.07 percent Thursday. The upgrade puts the country in the same ratings category as Belize and Cuba, eight steps below investment grade.