Jamaica has demonstrated fiscal discipline since it entered into International Monetary Fund (IMF) guided economic reforms in 2013. Through successive programs, Jamaica restructured its domestic debt and undertook ambitious economic and legislative reforms to include the elimination of sector-specific tax incentives and waivers and improving the business climate. By the time the program ended in 2019, Jamaica had successfully passed all its reviews with the macro-economic indicators showing major improvements. The debt to GDP ratio moved from a peak of almost 150 percent to near 90 percent and inflation has averaged low single digits and unemployment fell to a record low of 7.2 percent. The Net International Reserves has remained near US$3.0 billion (over 30 weeks of goods and services imports), up from US$1 billion at end December 2013, while the current account deficit has improved to low single digit from over 10 percent of GDP in 2013.
The gains from the program allowed government to propose what was considered one of the most positive budgets in early 2020, increasing capital expenditure and social spending and lowering consumption taxes. However, by April 2020, it became evident the first order effects of the COVID-19 pandemic would derail the economic recovery, forcing government to revise its budget. By the end of the year, output declined, the debt to GDP ratio increased to 10 percent and unemployment jumped to double digit levels. Inflation has also surged on the back of global supply chain disruptions and commodity price shocks associated with the Russia’s invasion of the Ukraine. However, the economy has expanded for seven consecutive quarters on the back of the recovery in tourism and unemployment has fallen to a record low of 6.2 percent. Disciplined fiscal policy has also allowed the government to reverse its debt to GDP ratio, which fell to about 96 percent by March 2022.
Political & Economic Environment: State Department’s website for background on the country’s political environment.