KINGSTON, Jamaica—Fitch Ratings has revised Jamaica’s credit outlook to stable from positive, effectively ruling out a near-term upgrade, after Hurricane Melissa caused severe economic damage.

The agency affirmed the country’s ‘BB-‘ rating.

The shift indicates that the momentum which had pointed towards an upgrade has now paused. A stable outlook means Fitch expects Jamaica’s credit rating to remain unchanged over the next one to two years. A positive outlook, by contrast, suggests that an improvement in the rating was likely if economic conditions continued to strengthen. By moving Jamaica back to stable, Fitch is signalling that the momentum that once pointed towards an upgrade has now paused.

The government’s preliminary estimates put damage from the storm at around 30 per cent of Gross Domestic Product (GDP), or approximately US$6 billion to US$7 billion.

This aligns with earlier assessments from the World Bank and Inter-American Development Bank, which had estimated physical damage at a record US$8.8 billion. Fitch forecasts Jamaica’s economy will contract by 1.5 per cent in 2025 before a modest recovery of 1.8 per cent in 2026.

The agency warned of “adverse effects that could linger for key sectors like tourism, agriculture and mining,” with tourism receipts projected to decline by 15 per cent in both 2025 and 2026. Before the storm, tourism inflows represented nearly 20 per cent of Jamaica’s GDP.

The current account — which measures the flow of goods, services and money between Jamaica and the rest of the world — is expected to slip into a deficit in 2026 after posting a surplus equal to 3.1 per cent of GDP in 2024.

A deficit means Jamaica would be spending more on imports and other external payments than it earns from exports, tourism, remittances and other inflows. However, rising remittances are expected to soften the impact.

Fitch also noted that Jamaica’s foreign exchange reserves remain strong at US$6.2 billion, enough to cover nearly seven months of external payments — well above the ‘BB’ country median of 4.8 months.

In response to the crisis, the government will suspend the Fiscal Responsibility Law for two years. Fitch expects the public finances to shift sharply, with the general government balance moving from a small surplus of 0.2 per cent of GDP in 2024 to a deficit of 3.2 per cent in the 2025 fiscal year. This reversal is likely to push the debt-to-GDP ratio up to about 68 per cent by the end of 2026, breaking the years-long downward trend that had brought debt down from 135 per cent in 2012.

Jamaica enters the recovery period with several financial buffers designed to ease the fiscal pressure created by Hurricane Melissa. These include access to nearly US$250 million in contingency funds, US$384 million in available multilateral credit lines, and an estimated US$1 billion to US$2.5 billion in expected private insurance inflows.

These resources provide the government with short-term liquidity and support its ability to manage reconstruction costs without facing immediate financing stress.

Fitch noted that Jamaica’s ‘BB-’ credit rating is underpinned by the country’s strong performance on the World Bank Governance Indicators, describing them as “substantially stronger than ‘BB’ medians.”

These indicators measure factors such as government effectiveness, rule of law, regulatory quality and control of corruption. Jamaica’s consistently high scores reflect robust institutions and a long-standing commitment to responsible fiscal management — strengths that help stabilise the country’s credit profile even in the face of significant economic shocks like Hurricane Melissa.

Fitch indicated that significantly larger-than-expected economic losses or a slower recovery could lead to a negative rating action, while a renewed decline in the government debt-to-GDP ratio could eventually support a positive rating action.

The agency believes the government remains committed to its fiscal framework and will actively seek to reduce its debt burden once reconstruction efforts are advanced.