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S&P: Lack of IMF agreement impacting Jamaica’s creditworthiness
According to S&P, Jamaica’s international reserves will be able to cover “just over three months of current account payments as of the end of 2012.”
“We expect GDP growth will remain low this year, likely about 1 percent,” S&P said. “In addition, the lack of a new agreement with the International Monetary Fund (IMF) has sustained uncertainty about economic policies, detracting from Jamaica’s creditworthiness.”
The firm did say that Jamaica’s “stable democratic government” and its “success in financing a large share of its borrowing needs in the domestic capital markets” supported the ratings.
The negative outlook reflected what S&P called its view of the “likelihood of a downgrade” if Jamaica fails to increase its primary surplus and meet other requirements necessary to receive IMF funding.
“Our view is that the government’s room for fiscal maneuvering is narrowing,” the firm said. “If the government fails to stabilize both the external and fiscal accounts, we would likely lower the rating.”
If it improved its fiscal stance with a credible economic plan, however, Jamaica’s credit-worthiness could improve.
Source: Caribbean Journal
