Jamaica’s outlook was raised to positive by Fitch Ratings as the Caribbean island continues its rebound from a 2013 default on about $9 billion of local bonds.
Prime Minister Portia Simpson Miller’s government has won praise and funding support from the International Monetary Fund for restoring growth after the default, its second in three years.
“Growth in tourism, the re-opening of some shuttered capacity in the bauxite and alumina sector, infrastructure investments, a strengthening U.S. economy and an improvement in terms of trade all point to stronger growth in 2015-2016 of around 2 percent, well above the lackluster five-year average of 0.2 percent,” Fitch analyst Charles Seville wrote in a report on Thursday.
Jamaica’s debt-to-gross domestic product ratio will fall to 120 percent within two years from an estimated 131.6 percent this fiscal year, Fitch said. The company left its B- rating, six steps below investment grade, unchanged. That puts the $14 billion economy in the same category as Cyprus.
In a Feb. 9 report, Oppenheimer & Co. said Jamaica could reduce its debt by an additional 10 percentage points of GDP if it buys back $2.9 billion in debt owed to Venezuela’s state- owned oil company under the Petrocaribe energy pact.
Minister of Finance and Planning Peter Phillips said the country is “actively pursuing” its options for the debt following the Dominican Republic’s decision to pay off $4 billion in Petrocaribe debt at a discount of 52 percent, the Jamaica Observer reported Feb. 6.
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