KINGSTON, Jamaica – Jamaica’s Minister of Finance and the Public Service, Audley Shaw, has said that a report that the rating agency, Standards & Poors, had retained Jamaica’s ‘B’ rating was positive, although moving its outlook on Jamaica from stable to negative.
This is in the context of the global financial crisis, which has had an adverse effect on the capital market, especially emerging market economies like Jamaica.
Mr. Shaw explained in a Statement, that the ‘B’ rating was retained, as the Government had been able to maintain relative stability in the foreign exchange market and the local capital market with timely policy responses.
Hon. Audley Shaw
He said that the fiscal performance to the end of September had remained on target, despite some slippage in revenue, which was partly due to the passage of Tropical Storm Gustav.
While acknowledging the slippage in the current account deficit, the Minister is confident that improvements would take place as a result of falling oil prices and increased output from domestic agriculture.
In addition, the Government is pursuing a range of strategies, designed to safeguard Jamaica’s economy and international credibility during the global turbulence.
1. The decision of the Government to re-engage the Multilateral institutions, which has already led to a written commitment from the Inter-American Development Bank (IDB), to provide US$100-US$200 million in Policy-based loans over the next five years. Negotiations are also now at an advanced stage with the World Bank and the Caribbean Development Bank (CDB), for a similar accommodation.
2. The decision of the Bank of Jamaica to provide liquidity support to the local financial sector, should it become necessary in the face of the global financial situation. The Bank of Jamaica will also seek liquidity support from the IDB, should it become necessary.
“The Government foresees no problem in raising the remaining US$250 million from external sources for the remainder of this fiscal year. And over the next two fiscal years, outside of the Multilateral Institutions, the external borrowing requirements will be only US$250 million in 2009/10 and US$300 million in 2010/11, respectively,” the Minister said.
Mr. Shaw noted that S & P had downgraded a number of other countries, including Costa Rica, El Salvador, Iceland and Latvia.
He pointed out that the Government would shortly provide to Parliament, a detailed outline of the budget for the remainder of this fiscal year and in the medium term.