The following is Part 2 of a two-part series. Part 1 was published on May 13, 2025.

Jamaica’s macroeconomic policies have been a cornerstone of its resilience. The fiscal-monetary policy mix, as noted by the International Monetary Fund (IMF), positions the country well to navigate global risks. The expected primary surplus in FY2025/26 — likely around 6 per cent of gross domestic product (GDP), based on historical targets — ensures continued debt reduction while preserving fiscal space for social spending. The Bank of Jamaica’s (BOJ) monetary policy has been adept at anchoring inflation, with the 2024 rate cut reflecting a nuanced response to temporary shocks rather than structural pressures.

Institutional reforms have further strengthened Jamaica’s policy frameworks. The Fiscal Commission, operational since early 2025, provides independent assessments of macroeconomic forecasts and budget compliance with fiscal rules, enhancing transparency. Jamaica’s fiscal responsibility framework, introduced in 2010, mandates a debt-to-GDP target of 60 per cent by 2028, a goal the country is on track to meet early. Wage bill reforms, which reduced distortions in public sector compensation, have increased transparency and competitiveness, aligning salaries with private sector benchmarks. Tax and customs administration improvements, including digitalisation efforts, have boosted compliance, with revenue collection rising by 8 per cent in FY2024/25, per the Ministry of Finance.

Financial sector reforms are also advancing. Jamaica is adopting the Basel III framework, which strengthens bank capital requirements and risk management. The introduction of a “twin peaks” supervisory regime — separating prudential and market conduct oversight — enhances regulatory oversight. The BOJ is expanding its supervisory perimeter to include non-bank financial institutions, and consolidated supervision is being improved to address risks in financial conglomerates. These measures build on Jamaica’s exit from the Financial Action Task Force (FATF) gray list in 2020, reflecting progress in anti-money laundering and counter-terrorism financing (AML/CFT) frameworks.

However, the IMF identifies areas for improvement. Wage bill management remains critical to avoid crowding out other priorities, such as education and infrastructure. Public spending efficiency could be enhanced, as recommended by the June 2024 Agile Public Expenditure and Financial Accountability (PEFA) assessment, which highlighted inefficiencies in procurement and budget execution. The fiscal responsibility law could benefit from an explicit operational debt anchor — say, 50 per cent of GDP — below the current 60 per cent limit, to guide medium-term policies and build fiscal buffers. Greater exchange rate flexibility, by deepening the foreign exchange market, would strengthen monetary policy transmission, allowing the BOJ to respond more effectively to economic shocks. Finally, passing the Special Resolution Regime law would provide a framework for resolving failing financial institutions, while further Anti-Money Laundering/ Countering the Financing of Terrorism (AML/CFT) improvements would bolster financial stability.

Jamaica’s potential growth, estimated at 1.5–2 per cent, is constrained by structural challenges: low productivity, high crime, poor educational outcomes, inadequate infrastructure, and trade barriers. The IMF commends the authorities’ efforts to tackle these issues. Investments in policing have led to a sustained decline in major crimes, with murders falling by 15 per cent in 2024, per the Jamaica Constabulary Force (JCF). This progress is critical, as crime costs Jamaica an estimated 4 per cent of GDP annually, according to a 2023 Inter-American Development Bank study.

Labour market reforms, including unemployment insurance and enhanced employment services, aim to sustain the record-low unemployment rate. However, educational outcomes remain a concern, with only 40 per cent of secondary students passing core subjects like mathematics and English in 2024, per the Ministry of Education. Infrastructure gaps, particularly in transportation and water systems, hinder productivity, with the World Bank estimating a $2-billion investment need over the next decade. Trade barriers, such as high tariffs and bureaucratic delays, limit export competitiveness, despite Jamaica’s strategic location.

The Government’s focus on sustainability is noteworthy. Measures to reduce pollution and incentivise low-carbon technologies align with Jamaica’s commitment to the Paris Agreement, aiming for a 25 per cent reduction in emissions by 2030. A comprehensive action plan to improve statistics, supported by the IMF, will enhance data quality, crucial for evidence-based policymaking.

Innovative Solutions to Sustain and Accelerate Jamaica’s Economic Progress

While Jamaica has made remarkable strides, sustaining and accelerating its economic progress requires innovative, forward-looking solutions to address both structural weaknesses and emerging challenges. Policymakers could consider:

1) Green bonds and climate resilience funds: Issue sovereign green bonds to fund renewable energy, climate-resilient infrastructure, and sustainable agriculture, attracting Environmental, Social, and Governance (ESG)-focused investors.

2) Public-private partnerships (PPPs) for infrastructure: Expand PPP frameworks to bridge infrastructure gaps, particularly in transportation and water, while managing fiscal risks through transparent contracts and oversight mechanisms.

3) Digital economy investments: Accelerate digital transformation by investing in broadband access, digital literacy, and e-government services to enhance productivity and inclusion.

4) Education reform: Redesign the curriculum to include vocational training, critical thinking, and digital skills, aligned with labour market demands. Partner with the private sector to develop work-study and apprenticeship programmes.

5) Diaspora bonds: Leverage patriotism and trust by issuing diaspora bonds for targeted development projects, offering competitive returns and impact transparency.

6) Innovation hubs and start-up financing: Establish innovation zones and seed funding platforms for startups, particularly in agritech, fintech, and the creative industries, fostering entrepreneurship and exports.

Jamaica’s journey over the past decade is a testament to the power of disciplined policy, institutional reform, and the resilience of its people. The country has achieved a rare economic turnaround, earning international praise. Yet the road ahead demands continued vigilance, strategic planning, and bold innovation. By addressing structural barriers, investing in human capital, and embracing sustainable development, Jamaica can transition from a narrative of resilience to one of enduring prosperity.

janielmcewan17@gmail.com