AS the Jamaica Labour Party (JLP) eyes what has long eluded them — a historic third-consecutive term — it is, unsurprisingly, leaning hard on its economic record.

For years it has styled itself as the Administration that “fixed the economy”. Yet the foundations of the macroeconomic stability Jamaica enjoys today predate the party’s return to office in 2016.

That is not to suggest it has contributed nothing to preserving stability. The Administration’s role in advancing the country’s disaster-risk financing framework is acknowledged, especially given our vulnerability to natural disasters and the implications for economic resilience. It should also be credited for ensuring policy continuity in the macro-fiscal framework left behind by the previous People’s National Party (PNP) Administration.

Improved Debt Sustainability

Indeed, the Fiscal Responsibility Law (FRL) has been the cornerstone of Jamaica’s fiscal policy formulation. What is often absent from the JLP’s narrative, however, is that while the FRL existed in some form before, it was the PNP Administration that gave it teeth in 2014 — embedding into law the binding requirement to achieve a 60 per cent debt-to-gross domestic product (GDP) target.

The enhanced FRL didn’t just codify that debt commitment, it imposed explicit fiscal rules — including mandatory fiscal balance targets and a legally defined deadline — to ensure its achievement. These rules cannot be breached without parliamentary approval.

In other words, while the JLP points to improved debt sustainability as proof of superior economic management, the reality is that any Administration — regardless of political stripe — would have been bound by that very legal framework. The low debt-to-GDP ratio it now champions is not a product of economic brilliance, it is a direct outcome of binding fiscal rules enacted under the PNP’s watch.

The State of Play in 2012

Jamaicans will recall that when the PNP returned to office in 2012 the economy was on the verge of collapse. The country was effectively shut out of international capital markets. Confidence among global financial institutions had evaporated, and public debt dynamics were spiralling in the wrong direction.

Much of that crisis, in my opinion, stemmed from the JLP’s mishandling of Jamaica’s engagement with the International Monetary Fund (IMF) between 2010 and 2011. That period also saw the public debt stock balloon by over half a trillion dollars, all racked up in just one term under the JLP.

The PNP Administration that followed made the politically costly — but economically necessary — decisions to stabilise the macroeconomy. The fiscal consolidation, structural adjustments, and IMF programme reforms implemented between 2013 and 2016 were never going to bear fruit overnight. That’s simply not how economies work. Structural reforms, by their very nature, operate with a lag — often several years — gradually filtering through the economy before their full impact becomes evident.

That is precisely why, although key indicators were already improving during the PNP’s last term — the debt-to-GDP ratio had fallen by nearly 20 per cent, foreign reserves were climbing, the external position had strengthened — it was inevitable that the most visible gains would materialise under the Andrew Holness Administration.

But they are not solely the product of JLP’s economic management. They are, in large part, the delayed dividends of hard, often unpopular, decisions for which the PNP paid the political price.

Real Economy Underperforming

While the country has strengthened its macroeconomic stability, the real economy under Holness has not fared nearly as well — and this, despite the Administration benefiting from the most favourable fiscal conditions in a generation.

When economists speak of the ‘real economy’, we refer to the production, distribution, and consumption of goods and services — the economic activities that tangibly affect people’s daily lives. It is distinct from macroeconomic indicators.

The truth is the real economy continues to underperform. Many Jamaicans do not feel materially better off, and with good reason. Real GDP growth has averaged below 2 per cent under Holness — far below what is needed to meaningfully lift living standards, improve job quality, or stimulate broad-based economic advancement.

The low unemployment rate masks the reality of pervasive underemployment. Too many Jamaicans are trapped in low-wage, low-productivity jobs. These are jobs that neither offer security nor promote upward mobility.

Private sector investment, beyond a few sectors, such as tourism and construction, remains shallow and uneven. Productivity, central to driving sustainable wage growth and competitiveness, continues to decline. And despite claims of progress, inequality persists, with benefits concentrated in specific sectors rather than felt evenly across the society.

Why the Disconnect?

Stability is a necessary precondition for growth, but it does not, in itself, guarantee shared prosperity. One cannot build a prosperous economy by simply maintaining a sound fiscal balance sheet, just as one cannot call a house complete simply because the foundation is solid.

While the austerity-driven fiscal consolidation during the PNP’s term was necessary to restore macroeconomic stability, the policy choices that followed under the Holness Administration have fallen short of what is required to translate that stability into sustained, broad-based growth. No Government can completely control economic outcomes, but policy choices still matter.

Nearly a decade later, critical barriers to real sector growth and competitiveness remain: limited capital expenditure, weak social development strategies, high energy costs, inefficient logistics, corruption, red tape, and a mismatch between workforce skills and market needs.

Perhaps most concerning is the policy imbalance that has emerged. There has been an undeniable emphasis on maintaining the technical optics of stability. Far less energy and political will have been directed towards implementing a coherent growth strategy — one that prioritises industrial development, technological innovation, and productivity-enhancing reforms.

The Government’s ASPIRE initiative, launched in the 11th hour of its two terms, offers little beyond rhetoric and lacks the substance to drive meaningful growth.

In my opinion, after nearly 10 years of stewardship, the Holness Administration has yet to demonstrate it can close the gap between stability and prosperity. It may simply be beyond its capacity. The economy it has presided over reflects that — stable on paper, but falling short where it matters most.

Cleveland Tomlinson is the junior Opposition spokesman for finance and planning.

Dr Andrew Holness (Photo: Karl Mclarty)

Cleveland Tomlinson