JAMAICA’S careful economic management is paying off, the International Monetary Fund (IMF) said Thursday, crediting steady fiscal and monetary policies for putting the nation in a “good position” to face emerging global economic challenges.

The praise comes as the IMF concludes its recent assessment of the Jamaican economy against the backdrop of heightened global risks — including tighter financial conditions, weaker tourism demand, trade policy disruptions, and extreme weather events — which the fund says could derail the country’s hard-won economic stability.

But, pointing to Jamaica’s “enviable track record” of prioritising macroeconomic stability, the IMF encouraged the authorities’ “continued close monitoring” of global developments as they emerged, and expressed confidence that given where Jamaica is now, the country is well-placed to withstand any shocks.

“The current fiscal-monetary policy mix places Jamaica in a good position to respond to the various downside global risks, should they be realised,” the IMF staff said in its preliminary report on the nation’s economy following its week-long meetings from April 30 to May 7, 2025 with government counterparts, private sector, civil society, and development partners.

It pointed out that its confidence is backed by the fact that Jamaican authorities are maintaining strong macroeconomic policies supported by robust frameworks.

“For fiscal year 2025/26, a primary surplus is anticipated, which will help reduce public debt to about 65 per cent of GDP — the lowest in 25 years and significantly below pre-pandemic levels,” the IMF notes of the Government’s fiscal management. Turning to the Bank of Jamaica, the IMF pointed out that its monetary policy has successfully controlled inflation within its target range of 4 per cent to 6 per cent, addding that the central bank’s recent reduction in its policy rate from 7 per cent to 6 per cent was “justified by the temporary nature of recent weather-related shocks and the expectation that inflation” will largely continue within its target range for the foreseeble future.

Despite setbacks from Hurricane Beryl and Tropical Storm Raphael — which damaged agriculture, infrastructure, and temporarily disrupted tourism — economic activity is expected to normalise as recovery takes hold. The economy contracted in FY2024/25 due to these weather-related shocks, but unemployment has fallen to a historic low of 3.7 per cent as of January 2025, the IMF acknowledged, while strong tourism revenues and high remittances have contributed to a modest current account surplus over the past two fiscal years, alongside steady improvements in international reserves which reached a record US$5.9 billion at the end of April.

Looking ahead, the IMF projects that growth will settle at its potential rate once post-storm recovery is complete.

And while the IMF has said Jamaica has done well, it said sustaining the progress requires careful management of the wage bill to avoid crowding out other fiscal priorities, alongside measures to enhance public spending efficiency. For the current fiscal year, the Government is expected to spend $495 billion or about 40 per cent of total spending on compensation for the public sector compared with $340 billion or 26 per cent of total spending on debt servicing.

The IMF also suggests that Jamaica’s fiscal responsibility law — which sets rules for government borrowing and spending — could be improved by introducing a clear, operational debt anchor set below the existing debt limit.

“Strengthening the fiscal responsibility law with a clear debt anchor, deepening foreign exchange market reforms, and passing the Special Resolution Regime law would further bolster financial stability,” it added.

On the structural front, the authorities are addressing supply-side constraints — such as high crime, weak educational outcomes, and infrastructure gaps — through increased security investments, which have already reduced major crimes. Plans for unemployment insurance, improved employment services, and green energy incentives are also underway. A comprehensive statistical improvement plan is being developed to support evidence-based policymaking.