#Kingston, September 19, 2023 – Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says that upgrading of Jamaica’s credit rating by Standard and Poor’s will facilitate access to financing on better terms.

Standard and Poor’s (S&P) Global Ratings, on September 13, upgraded the Government of Jamaica’s Long-Term Foreign and Local Currency Issuer Default Rating (IDR) from B+ to BB-, with a ‘Stable’ outlook. 

It is the best global grading Jamaica has received from S&P since the entity started rating the country’s sovereign debt in 1999.

“Jamaica has the opportunity to access financing at costs lower than we have before, on a relative basis. Because the higher your credit rating, it means the more credit-worthy you are and the more credit-worthy you are, is the less that investors demand to lend you money,” Dr. Clarke stated.

“So, if you pay less for money that you need to finance yourself, it means more becomes available for other expenditure [such as] health, security and infrastructure. So, credit worthiness is linked to fiscal space. The higher your level of credit-worthiness, the more fiscal space that you can have, which, over a long period of time, amounts to a lot of resources,” he added.

The Minister was speaking during the opening ceremony for the Jamaica Institution of Engineers’ observance of Engineers’ Week, at The Summit in New Kingston on Monday (September 18).

Dr. Clarke also pointed out that there is a direct linkage between credit ratings and the country’s ability to finance the society’s needs.

He said Jamaica previously had a ranking of CCC, which is known as a junk credit rating status.

“There was a time where interest payments were 16 per cent of gross domestic product (GDP). Today, interest payments are like five per cent of GDP, and that is what has allowed us to rebalance the Jamaican economy, to put us on a strong footing and spend more on infrastructure than ever before,” Dr. Clarke indicated.

The Finance Minister also noted that the higher the credit rating, the more favourable the investment climate is deemed to be.

“It means that investments are less risky. Our credit rating is linked to the riskiness or the perceived riskiness of an economy. The higher the credit rating is the more open the economy will be to foreign investment. More foreign investment means more economic activity, more economic activity means more jobs for Jamaicans. So a higher credit rating provides an environment that supports the creation of more jobs for the Jamaican people,” Dr. Clarke stated.

Additionally, he said a higher credit rating affects the terms of trade that Jamaica has with the rest of the world.

Dr. Clarke pointed out that local businesses have to post bonds overseas in order to import items, while noting that Jamaica imports US$6 billion worth of items.

“For all of those imports, the businesses have to get credit… and for some of them, they have to post credit insurance, they have to put bonds up.  All of those become more affordable, the higher the credit rating of the country. So, this is wonderful news for Jamaica,” he stated.

Meanwhile, Dr. Clarke said Jamaica’s current credit rating is “just three notches below investment grade”.

“[Globally] there are trillions and trillions of institutional funds, [such as] pension funds. But you know what, because they are dealing with people’s lifetime savings, the rules forbid them to put a dollar of those kinds of money into countries that are below investment grade. When we get to investment grade credit rating, however, it is a different story,” the Minister informed.

“The kind of flows that will come to our shores represents the kind of investments that we have never imagined possible before. That is why it must be a national effort to, not only maintain the credit rating that we have earned as a country but to improve it… so that Jamaica becomes open to trillions of dollars of investable funds, to create opportunities for our people,” he added.

Dr. Clarke maintained that a higher credit rating will facilitate easier access to finance for projects.

Contact: Latonya Linton

Release: JIS