Fitch Ratings has adjusted Jamaica’s credit outlook from positive to stable, effectively halting any near-term upgrade prospects, following the severe economic damage inflicted by Hurricane Melissa. The agency reaffirmed the country’s ‘BB-’ rating, signaling a pause in the momentum that had previously pointed toward an improvement. A stable outlook indicates that Fitch expects Jamaica’s credit rating to remain unchanged over the next one to two years, contrasting with a positive outlook, which would have suggested potential upgrades if economic conditions continued to strengthen. The government’s preliminary estimates place the storm’s damage at approximately 30% of Jamaica’s GDP, equating to roughly US$6 billion to US$7 billion. This aligns with earlier assessments from the World Bank and Inter-American Development Bank, which estimated physical damage at a record US$8.8 billion. Fitch forecasts a 1.5% economic contraction in 2025, followed by a modest recovery of 1.8% in 2026. The agency highlighted prolonged adverse effects on key sectors like tourism, agriculture, and mining, with tourism receipts projected to decline by 15% in both 2025 and 2026. Before the storm, tourism accounted for nearly 20% of Jamaica’s GDP. The current account is expected to slip into a deficit in 2026 after posting a surplus of 3.1% of GDP in 2024, reflecting increased spending on imports and external payments. However, rising remittances are anticipated to mitigate the impact. Jamaica’s foreign exchange reserves remain robust at US$6.2 billion, covering 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, leading to a sharp shift in public finances. The general government balance is projected to move from a 0.2% surplus in 2024 to a 3.2% deficit in 2025, potentially pushing the debt-to-GDP ratio to 68% by the end of 2026. This reverses a years-long downward trend that had reduced debt from 135% in 2012. Despite these challenges, Jamaica enters the recovery period with significant financial buffers, including US$250 million in contingency funds, US$384 million in multilateral credit lines, and an estimated US$1 billion to US$2.5 billion in private insurance inflows. These resources provide short-term liquidity and support reconstruction efforts without immediate financing stress. Fitch emphasized that Jamaica’s ‘BB-’ rating is bolstered by strong performance on the World Bank Governance Indicators, which measure factors like government effectiveness, rule of law, and control of corruption. The agency warned that larger-than-expected economic losses or a slower recovery could lead to a negative rating action, while a renewed decline in the debt-to-GDP ratio could eventually support a positive rating action. Fitch believes the government remains committed to its fiscal framework and will actively seek to reduce its debt burden once reconstruction efforts advance.