NEW YORK, New York – Fitch Ratings has affirmed Jamaica’s Long-Term Foreign-Currency Issuer Default Rating at ’BB-’ and revised its outlook to stable from positive following the impact of Hurricane Melissa on October 28 that left 42 people dead and damage estimated at nine billion US dollars.
Hurricane Melissa damage in Jamaica (File Photo)Fitch said that the outlook revision reflects significant damages from the hurricane, which it expects will lead to economic contraction and require substantial reconstruction costs. Government preliminary estimates put economic damages at around 30 per cent of gross domestic product (GDP) and the international rating agency forecasts Jamaica’s economy will contract by 1.5 per cent this year before showing modest recovery of 1.8 per cent in 2026.
It said this is due to the “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.”
Tourism receipts could decline by 15 per cent year-over-year in both 2025 and 2026, with potential for steeper drops if large hotels remain closed beyond February 2026.
Fitch 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 US$250 million), multilateral lines of credit (at nearly US$384 million), and expected large private insurance flows (estimated insured damages range from one billion US dollars to US$2.5 billion).
The Jamaica government has suspended its Fiscal Responsibility Law for the next two years and Fitch expects the general government balance to swing to significant deficits, projecting a 3.2 per cent of GDP deficit for fiscal year 2025 from a 0.2 per cent surplus in fiscal year 2024, with further widening in fiscal year 2026 as reconstruction spending increases.
The debt-to-GDP ratio is expected to rise to nearly 68 per cent by end-2026, interrupting the previous downward trend. Fitch believes the government remains committed to reducing its debt burden once reconstruction efforts are complete.
Jamaica’s current account is forecast to move into deficit in 2026 from a 3.1 per cent of GDP surplus in 2024, as falling tourism receipts and mining exports are partially offset by rising remittances.
However, Fitch has expressed confidence in the Andrew Holness 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.”
