Fitch revises Jamaica's outlook from positive to stable following Hurricane Melissa

International rating firm Fitch has affirmed Jamaica’s sovereign credit rating at BB-, but has revised Jamaica’s Outlook from positive to stable, noting the significant damage inflicted by Hurricane Melissa, which it says is expected to lead to an economic contraction and require significant reconstruction costs.

Fitch says it expects the economy to contract in 2025, "with significant uncertainties around the pace of recovery, given adverse effects that could linger for key sectors like tourism, agriculture and mining. Economic contraction and fiscal deficits will interrupt the prior strong downward trend in government debt/GDP, which is still above the 'BB' median and vulnerable to changes in the exchange and interest rates."

It says the rating affirmation and stable outlook also reflect mitigating factors to the major hurricane shock, including insurance and contingency funds (combined totals at nearly USD250 million), multilateral lines of credit (at nearly USD384 million), and expected large private insurance flows (estimated insured damages range from USD1 billion-USD2.5 billion).

Additionally, Fitch expects Jamaica's foreign reserve position to remain healthy, aided by increased remittance inflows, strong relations with international financial institutions and a benign debt amortisation profile for the next few years.

"Despite considerable uncertainty regarding the impact of Hurricane Melissa, Fitch sees headroom at the current rating to accommodate negative economic growth and fiscal metric implications," it says.

Fitch estimates an economic contraction of 1.5 per cent in 2025 followed by a modest recovery of 1.8 per cent in 2026.

It says tourism receipts could decline by 15 per cent year-on-year in 2025, and by a similar level in 2026.

However, it warns this could be steeper if large hotels remain closed beyond February 2026, posing further downside on the growth baseline.

Fitch also projects that with the planned two-year suspension of the Fiscal Responsibility Law (FRL), Jamaica's debt to gross domestic product (GDP) ratio will rise to close to 68% by end-2026.

However, it has expressed confidence in the Government's management of debt, saying "Jamaica's government has a strong decade-plus track record of adhering to a solid fiscal framework, which has resulted in a sharp reduction in debt/GDP. We believe the government remains committed to its fiscal framework and will actively seek to reduce its debt burden once reconstruction efforts are achieved."

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