WASHINGTON, DC - The executive board of the International Monetary Fund (IMF) Wednesday said that for more than a decade, Jamaica has been implementing sound macroeconomic policies supported by strong policy frameworks.
The board which concluded the 2025 Article IV consultation with the Caribbean country, said that these efforts have allowed Jamaica to accumulate meaningful policy buffers, reduce public debt, anchor inflation, and improve its external position.
“Recent policy efforts have further strengthened fiscal responsibility, improved the effectiveness of public sector compensation, bolstered tax and customs administration, enhanced financial oversight, and built resilience to climate change including in the context of the recently completed PLL/RSF (Precautionary and Liquidity Line and Resilience and Sustainability Facility) arrangements,” the IMF executive board said.
It said that these advances allowed agile, prudent, and growth-supportive responses to recent global shocks and natural disasters, noting that the economy, which declined in financial year 2024/25 due to the weather events, is rebounding this year and is projected to grow at its potential rate with risks broadly balanced.
“The recovery is supported by a rebound in agriculture and tourism and its spillovers to other sectors. Risks comprise extreme weather events posing downside risks for tourism and agriculture, trade policy shocks, and disruptions to tourism or the flow of remittances. Upside risks include a faster-than-expected recovery from recent weather events, favorable tourism trends, and favorable commodity price developments.”
The Washington-based financial institution said that maintaining primary fiscal surpluses to reach the Fiscal Responsibility Law’s (FRL) ceiling of 60 percent of gross domestic product (GDP) by financial year 2027/28 remains essential.
However, the IMF warned that fiscal policy could become too pro-cyclical in the face of severe shocks when the debt-to-GDP ratio reaches the FRL’s target.
It said incorporating an explicit operational medium-term debt anchor in the FRL at a level below 60 percent of GDP would help guide policies and ensure that debt is kept at moderate levels, creating fiscal buffers to respond to adverse events.
“The timeline for the eventual adoption of an operational debt anchor should be assessed in the context of heightened uncertainties, which could limit the country’s ability to meet a lower debt anchor in the medium-term.”
The IMF said Jamaica continues continue to improve the fiscal policy framework, noting that the IFC became operational in January 2025 and assessed the consistency of current fiscal plans with the FRL.
The Assessment of Public Expenditure and Financial Accountability (A-PEFA) assessment was completed in June 2024, providing recommendations to enhance public financial management.
“Reforms of tax and customs administration are supporting revenue mobilization, and sound debt management continues. The wage bill reform eliminating distortions and improving the transparency and competitiveness of the public pay to help retain skilled employees was completed last financial year,” the executive board said.
It said ongoing efforts to bolster the monetary and financial policy frameworks should continue and that there is support for the Bank of Jamaica’s (BOJ) cautious data-dependent monetary policy, noting that there should be scope to lower the policy rate but the heightened global uncertainties call for a cautious approach.
An inflation targeting regime with a strong international reserves’ position and stable foreign exchange (FX) markets have served Jamaica well.
“Going forward, there is scope to deepen FX markets by reducing surrender requirements and scaling back the BOJ’s FXI. Deepening capital markets, further de-dollarizing the economy, and boosting banking sector competition would improve resource allocation and help strengthen monetary transmission.
“The adoption of Basel III, the expansion of the BOJ supervisory remit, and unification of financial supervision under a twin-peaks regime are all going in the right direction.”
The IMF said that Jamaica exited the Financial Action Task Force (FATF) increased monitoring (grey list) in June 2024 and that building on this achievement, the authorities in Kingston continue to strengthen Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) and are preparing for the fifth round of the Mutual Evaluation Process, expected by mid-2026).
“A multipronged approach is required to overcome supply-side constraints to growth. Low productivity resulting from the misallocation of resources is amplified by structural impediments including high crime, barriers to competition, poor educational outcomes, inadequate infrastructure, and barriers to trade.
“The authorities are addressing these barriers through product and labor market reforms, education, infrastructure, trade, and climate-aware reforms including by completing reform measures under the RSF completed last September. These reforms have the potential to catalyze private sector financing for climate-related investment,” the IMF executive board said.
Earlier, the IMF staff assessment had noted that over the last decade, Jamaica has successfully reduced its public debt, firmly anchored inflation and inflation expectations, and strengthened its external position.
“It has built an enviable track record of investing in institutions and prioritizing macroeconomic stability. Jamaica has met recent global shocks and natural disasters in an agile, prudent, and growth-supportive manner. GDP declined in financial year 2024/25 due to hurricane Beryl and tropical storm Raphael which damaged agriculture and infrastructure and undermined tourism. Nonetheless, economic activity is projected to normalize as these effects wane.”
The country’s unemployment has fallen to all-time low levels (3.7 percent in January 2025) and inflation has converged to the BOJ’s target band of four to six percent.
The IMF said nonetheless, global developments require continued close monitoring as downside risks emanating from tighter global financial conditions, lower growth in key source markets for tourism, and trade policy disruptions remain high.
It said extreme weather events could negatively affect economic activity.
