The following is the first of a two-part series.

On May 8, 2025, the International Monetary Fund (IMF) released a concluding statement following its 2025 Article IV consultation with Jamaica, conducted from April 30 to May 7 in Kingston and virtually.

Led by Mauricio Villafuerte, the IMF team met with Jamaican Government officials, private sector representatives, civil society, and development partners to assess the country’s economic performance and policy frameworks. The statement highlights Jamaica’s impressive progress over the past decade in reducing public debt, stabilising inflation, and strengthening its external position, despite recent setbacks from natural disasters like Hurricane Beryl and Tropical Storm Raphael.

This article provides an in-depth analysis of the IMF’s findings, examining Jamaica’s economic trajectory, policy reforms, and the structural challenges that must be addressed to sustain its gains and foster long-term growth. It also proposes innovative solutions to enhance Jamaica’s economic resilience and accelerate its path to sustainable development.

Jamaica’s Economic Turnaround

Jamaica’s economic story over the past 10 years is nothing short of extraordinary. Once burdened by one of the highest debt-to-gross domestic product (GDP) ratios in the world — peaking at 147 per cent in 2013 — the country has methodically reduced its public debt to a projected 65 per cent of GDP by the end of FY2025/26, according to the IMF statement. This marks the lowest level in 25 years, a feat that places Jamaica well below its pre-pandemic debt levels of 94 per cent in FY2019/20.

The reduction reflects a disciplined fiscal policy anchored by consistent primary surpluses, with a surplus expected again in FY2025/26. A primary surplus — whereby government revenues exceed non-interest expenditures — has allowed Jamaica to redirect resources towards debt repayment while preserving space for critical investments.

Inflation, a persistent challenge for many emerging economies, has been firmly anchored within the Bank of Jamaica’s (BOJ) target range of four to six per cent. As of May 2025, inflation has converged to this band, with expectations stabilising near the upper limit. This achievement is a far cry from the double-digit inflation rates of the early 2010s when Jamaica grappled with price volatility driven by currency depreciation and external shocks.

The BOJ’s monetary policy framework, which includes an inflation-targeting regime adopted in 2017, has been instrumental in this success. The 2024 decision to lower the policy rate — likely from 7 per cent to around 6 per cent, based on historical trends and the IMF’s mention of a justified cut — reflects confidence in the temporary nature of weather-related inflationary pressures and the BOJ’s ability to maintain price stability.

Jamaica’s external position has also strengthened significantly. The current account, which measures the balance of trade in goods, services, and transfers, has recorded a modest surplus for the past two fiscal years. This surplus, driven by robust tourism revenues and high remittances, underscores Jamaica’s role as a premier Caribbean destination.

Tourism, which accounts for roughly 30 per cent of GDP and employs one in four Jamaicans, has rebounded strongly post-pandemic, with 2024 visitor arrivals surpassing four million, according to the Jamaica Tourist Board.

Remittances, a lifeline for many Jamaican households, reached $3.5 billion in 2024, per World Bank data, buoyed by the Jamaican Diaspora in the US, Canada, and the UK. International reserves have continued to grow, reaching $5.2 billion by April 2025, as reported by the BOJ, providing a buffer against external shocks.

Unemployment, a long-standing issue, has fallen to a historic low of 3.7 per cent in January 2025, down from 6.2 per cent in 2022, per the Statistical Institute of Jamaica (Statin). This decline reflects both the tourism boom and targeted labour market reforms, such as improved job matching and counselling services.

However, the GDP contraction in FY2024/25 — estimated at 1.2 per cent by the Planning Institute of Jamaica (PIOJ) — due to Hurricane Beryl and Tropical Storm Raphael highlights the island’s vulnerability to natural disasters. These storms devastated agriculture, which contributes about 7 per cent to GDP, and disrupted tourism, particularly in the third quarter of 2024. Infrastructure damage, including roads and utilities, further compounded the economic toll.

Path to Recovery

The IMF projects that Jamaica’s economic activity will normalise in FY2025/26, with growth settling at its potential rate of around 1.5 to 2 per cent annually, consistent with long-term trends reported by the World Bank. This recovery hinges on the waning effects of the 2024 storms, a rebound in agriculture, and sustained tourism growth. Inflation is expected to stabilise at the midpoint of the BOJ’s 4-6 per cent target range, around 5 per cent, supported by the central bank’s proactive monetary policy.

Yet the outlook is not without risks. Global downside risks loom large, particularly tighter financial conditions stemming from monetary policy tightening in advanced economies. The US Federal Reserve, for instance, raised interest rates to 5.5 per cent in 2024, per Federal Reserve data, increasing borrowing costs for emerging markets like Jamaica. Lower growth in key tourism markets — such as the US, which accounts for 70 per cent of Jamaica’s visitors — could dampen arrivals.

The US economy grew at a modest 2.1 per cent in 2024, according to the Bureau of Economic Analysis, below the 3 per cent threshold that typically fuels robust travel demand. Trade policy disruptions, such as potential tariffs under a new US Administration in 2025, could also affect Jamaica’s exports, particularly alumina, which constitutes 40 per cent of goods exports.

Closer to home, extreme weather events remain a persistent threat. Jamaica’s location in the hurricane belt makes it prone to storms, floods, and even earthquakes. Hurricane Beryl, a Category 4 storm, caused damage estimated at $1.2 billion, or 5 per cent of GDP, per the PIOJ. The increasing frequency and intensity of such events, driven by climate change, underscore the need for resilient infrastructure and disaster preparedness. The IMF’s warning about these risks aligns with a 2024 Caribbean Development Bank report which estimates that climate-related damage could cost Caribbean economies up to 10 per cent of GDP annually by 2030 if unmitigated.

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