IMF Western Hemisphere Department
February 22, 2022
Prior to the pandemic, Jamaica had successfully stabilized the economy, turning a fiscal deficit of 11 percent of GDP in 2009 into a 1 percent surplus in 2019, and reducing public debt from 142 percent of GDP in 2009 to 94 percent by 2019. The stabilization paid off through a sharp decline in interest rates, and the government’s interest bill fell from 17 percent of GDP in 2009 to 6 percent in 2019.
When the economy was hit by the pandemic, the government temporarily reduced the fiscal balance target to increase spending on health and social protection and reduced the VAT rate.
To safeguard the country’s hard-won economic stability and in line with the Fiscal Responsibility Law, the government aims to reduce public debt to 60 percent of GDP by 2028. This will further reduce interest payments, creating scope to boost spending on education, infrastructure, and poverty reduction, as well as improving the country’s resilience to natural disasters.
