Moody’s Upgrade Should Impact Investment
November 23, 2016
FAYVAL Williams, minister of state in the Ministry of Finance and the Public Service, said yesterday that the two-notch upgrade to B3 by Moody’s Investors Service reflects the rating agency’s confidence in the Government’s continued fiscal discipline and the strong emphasis on economic growth and job creation.
This week, Moody’s upgraded Jamaica’s Government issuer, senior unsecured and provisional shelf ratings to B3 from Caa2, and changed the Caribbean island’s outlook to stable from positive.
Moody’s said its decision to upgrade Jamaica’s ratings was driven by "significant and sustained fiscal consolidation, and the Government’s strong commitment to continued reforms to reduce its high debt burden.
"Having the [new] Stand-by Arrangement in place in such quick succession and in such a seamless manner significantly reduces the risk to the economy and helps to boost confidence among local and international investors. The change in the outlook to stable, together with the rating upgrades are hugely positive for Jamaica," the state minister told the
Jamaica Observer yesterday.
Two Thursdays ago the Government inked a new Stand-By Agreement with the International Monetary Fund (IMF) board to replace the existing arrangement which comes to an end in March 2017. The new economic programme will provide Jamaica with assistance from the IMF over three years. The agreement is equivalent to support of US$1.7 billion.
Moody’s in its ratings release made note of the new IMF agreement, stating, "a factor underpinning the upgrade is our expectation that even as the authorities shift focus towards achieving higher growth rates, they will maintain their fiscal performance and primary surplus of around seven per cent of GDP over the next three years".
The news of improved ratings also...