Stakeholders in the private sector are calling on the Government of Jamaica to communicate and act swiftly to allocate the gains from the country’s macroeconomic programme, which resulted in the highest credit rating ever from Standard and Poor’s Global Rating (S&P Global) since it started rating the country’s debt in 1999.

S&P Global on Wednesday in a release outlined that it has raised Jamaica’s long-term foreign and local currency sovereign debt credit rating from B+ to BB- while maintaining a stable outlook, citing the country’s commitment “to meeting its ambitious debt reduction targets during the pandemic and related contractions”. The ratings agency said it expects the country’s debt to fall to 60 per cent of gross domestic product (GDP) by the end of fiscal year 2023/24, after reaching 64 per cent at the end of 2022.

“The benefit of this credit upgrade to Jamaica is that it provides the ability for Jamaica to get better terms on financing which can save a substantial amount of money in the long run leaving more room for spending on education, health, security and infrastructure. It also makes Jamaica a more attractive place to invest. This will lead to more investments, more economic activity and more jobs for Jamaicans,” Dr Nigel Clarke said in reaction to the news.

Commenting on the improved S&P rating, president of the Jamaica Chamber of Commerce (JCC) Michael McMorris said the business lobby group is celebrating the unprecedented upgrade in the ratings, noting that it’s a significant milestone in Jamaica’s journey to economic sustainability and national progress.

However, he also pointed out that it is the responsibility of the Government to now communicate how the dividends from the improvements in Jamaica’s macroeconomic programme will be translated at the microeconomic level.

“We look forward to the honourable prime minister and minister of finance, both who continue to play a starring role in our fiscal comeback, explaining to the people how they intend to secure and direct this meaningful dividend to the benefit of us all. Such a conversation is crucial to ensuring the commitment of the people to support the economic choices being made every day,” the JCC president informed Jamaica Observer.

“Many of our social ills stem from the fact that the people do not feel enough of the benefit of these hard-won gains and greater participation in the conversation can go a long way,” he continued.

In this regard, McMorris argued while over the last decade administrations have led the way by “imposing and inspiring the necessary discipline in our fiscal expenditure and improving the structure of our economy”, the people of Jamaica must also be praised for accepting “a significant level of sacrifice and forbearance”.

In addition, he also applauded the business community for its essential contribution through taxes and employment, and foreign exchange from the exporters of goods and services.

“We urge our business community to be inspired by this story of fiscal discipline and rigorous attention to making the right choices. At the level of the firm, under the right conditions there will also be a dividend of lower borrowing costs to finance growth in international trade and inward investment. Let us use it to build the efforts in our internationally competitive industries at home and abroad to further deliver on the confidence in our financial management being embraced across the world,” McMorris added.

Like the JCC president, chairman of the Economic Programme Oversight Committee Keith Duncan attributed the improved S&P ratings to the disciplined macro-fiscal management over the past 10 years.

“This ratings upgrade would also be driven by the institutional architecture with an independent central bank and the new independent fiscal commission which is being established along with the natural disaster risk mitigation strategies that have been put in place. This upgrade is a welcome development and should see Jamaica being able to negotiate better terms of financing of its debt and lower cost of capital for businesses,” he told Caribbean Business Report.

The International Monetary Fund in March this year approved the disbursement of US$968 million to Jamaica under the Precautionary and Liquidity Line, which aims to provide insurance against risks from higher commodity prices, a global slowdown, tighter-than-expected global financial conditions, and new COVID outbreaks. It also approved the allocation of US$764 million under the Resilience and Sustainability Facility to strengthen physical and fiscal resilience to climate change.

Duncan anticipates that as the costs of financing and capital fall, there will be greater allocation of resources to government investments in infrastructure, human capital, and social services. At the same time, with the ratings upgrade also having the impact of reducing Jamaica’s risk profile, the EPOC chair believes the country will be better positioned to attract foreign direct investments.

“A reduced cost of capital for businesses would increase investable capital for driving investments,” he said.

Highlighting areas in which the Government should prioritise investment, Duncan said, “The constraint that Jamaica has is [a] significant skills gap, and more resources could be deployed in education at the early childhood and primary level to give our children a stronger foundation so that their minds are ready for jobs which require higher level skill sets to drive value-added growth, higher per capita incomes and greater levels of growth of the Jamaican economy.”

He also advocated for even more allocations to social and economic transformation of marginalised and depressed communities, and over the medium to long term result in the reduction crime and violence.

Still, Private Sector Organisation of Jamaica President Metry Seaga cautioned that Jamaicans should not anticipate seeing the dividends of improved fiscal management immediately, but rather gradually.

“The impact that [the ratings upgrade] is gonna have may not be as immediate as some may think. Whilst that is going to take some time for people to feel, what it does is create an environment that more people are willing to invest in, and people who were on the fence about whether to invest in Jamaica or not may now look at Jamaica as a feasible option than anywhere else,” he said to Caribbean Business Report.

In fact, Seaga said that Jamaicans are already seeing the benefits of the Governments macroeconomic programme with employment now at a its lowest level in history —4.6 per cent. However, he argued that there will need to be more investments in education with the expectation of greater foreign investments that could create more and high-value jobs.