Wiredja Online News Logo

WiredJa Online News

Wiredja Online News Logo

WiredJa Online News

Log in

Improved Moody's rating will help Jamaica

Featured Finance Minister Dr. Peter Phillips Finance Minister Dr. Peter Phillips
Finance Minister Dr Peter Phillips is predicting that the improved credit rating issued on Thursday by international rating agency, Moody's, will help Jamaica in its economic recovery. The rating upgrade came on the progress made so far in the economic reform programme.

The agency on Wednesday upgraded Jamaica's long term credit rating from B- to B while it affirmed its B rating for short term credit.

“The positive outlook reflects our expectation that Jamaica will sustain the reform momentum under the IMF-supported program, solidify fiscal adjustment to put government debt metrics firmly on a downward trajectory,” says the rating agency

As a result of this rating action, the long-term foreign currency bond ceiling changed to B2 from B3. The long-term foreign currency deposit ceiling changed to Caa3 from Ca. The long-term local currency bond and deposit ceilings changed to B1. The short-term foreign currency bond and deposit ceilings remain unchanged at NP.

   
In giving a rationale for the positive rating, Moodys said “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.

“They have introduced tax and expenditure reform measures, and maintained a large primary surplus of 7.5% over the past two years. We expect these reforms to put public finance on a more sound footing and help reach the authorities' target of cutting debt to less than 100% of GDP by 2020 from a 135% peak in 2013.

“The IMF-supported program remains firmly on track. It envisages reaching a balanced budget by 2016/17 and maintaining a primary surplus of 7.0% of GDP afterwards, which is necessary to ensure debt reduction.

“The Jamaican authorities have also approved rules to bolster fiscal transparency and lock in the hard-won gains of the ongoing fiscal consolidation. Several key reforms have been completed to improve Jamaica's business climate including a reform of tax incentives, implementation of the minimum business tax, and simplifying tax return filing for self-employed, allowing the country to advance 27 places on the Ease of Doing Business indicator compiled by the World Bank.

“The authorities' strong commitment and general consensus over reforms is supporting business confidence and private investment to boost economic growth prospects in the next 2-3 years.

Moody’s also pointed out that “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. They have introduced tax and expenditure reform measures, and maintained a large primary surplus of 7.5% over the past two years.

“We expect these reforms to put public finance on a more sound footing and help reach the authorities' target of cutting debt to less than 100% of GDP by 2020 from a 135% peak in 2013. The IMF-supported program remains firmly on track. It envisages reaching a balanced budget by 2016/17 and maintaining a primary surplus of 7.0% of GDP afterwards, which is necessary to ensure debt reduction.

“The Jamaican authorities have also approved rules to bolster fiscal transparency and lock in the hard-won gains of the ongoing fiscal consolidation. Several key reforms have been completed to improve Jamaica's business climate including a reform of tax incentives, implementation of the minimum business tax, and simplifying tax return filing for self-employed, allowing the country to advance 27 places on the Ease of Doing Business indicator compiled by the World Bank.

“The authorities' strong commitment and general consensus over reforms is supporting business confidence and private investment to boost economic growth prospects in the next 2-3 years.

Dr Phillips said the upgrade will have a positive outcome for Jamaica on the international capital market, particularly in respect of interest rate.

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.