THE Government of Jamaica (GOJ) has received approval to temporarily suspend the country’s fiscal rules for at least one year, subject to parliamentary approval, after the Independent Fiscal Commission (IFC) validated the move in response to the fiscal impact of Hurricane Melissa.

Based on preliminary assessments of the damage and the fiscal response outlined by the Ministry of Finance and the Public Service (MOFPS), the IFC agreed that the estimated fiscal impact of 5.3 per cent of gross domestic product (GDP) exceeds the 1.5 per cent legislative threshold, meeting the criteria for a temporary suspension of the fiscal rules.

“I have examined the documents provided by the Planning Institute of Jamaica and the Ministry of Finance & the Public Service, along with the preliminary estimates of the impact of Hurricane Melissa on Jamaica. Based on the information available to date, I find the estimated fiscal impact to be credible,” said Fiscal Commissioner Courtney Williams.

Under the Financial Administration and Audit (FAA) Act, the suspension of the fiscal rules may be triggered, along with other circumstances, by a declared natural disaster. This condition was satisfied when Hurricane Melissa, a Category 5 system, struck Jamaica on October 28, activating the suspension mechanism under the FAA (Amendment) Act, 2020. In reaching its conclusion the fiscal commissioner reviewed preliminary estimates from the Planning Institute of Jamaica (PIOJ) on the economic impact of Hurricane Melissa, including short-to-medium-term real sector projections, as well as the Ministry of Finance and the Public Service’s (MOFPS) preliminary assessment of the fiscal impact. These projections incorporated revised macroeconomic forecasts and the Government of Jamaica’s fiscal stance in responding to the socio-economic fallout from the hurricane.

“While the information provided is not as comprehensive as desired — given that damage assessments are still underway — the commission deems it broadly credible to validate suspension of the fiscal rules,” stated the commissioner’s report.

Preliminary projections indicate a cumulative fiscal impact of 5.3 per cent of GDP over the period FY 2025/26 to FY 2029/30. For FY 2025/26 the initial impact is estimated at 1.5 per cent of GDP, reflecting a 0.7 per cent contraction in tax revenue and a 0.8 per cent increase in expenditure. This impact is expected to be partially offset by $38.4 billion (1.1 per cent of GDP) in inflows from Jamaica’s disaster risk financing instruments, including US$150 million from the Catastrophe Bond and US$88.9 million from the Caribbean Catastrophe Risk Insurance Facility (CCRIF). Over the period FY 2026/27 to FY 2029/30, an additional $50 billion in capital expenditure annually is projected to support reconstruction efforts, representing a cumulative 4.9 per cent of GDP. As a result, the debt-to-GDP ratio for the specified public sector is expected to rise to 68.2 per cent by end-March 2026, up from 62.4 per cent at end-March 2025, and is projected to remain above the 60.0 per cent target through end-March 2028.

Jamaica’s Financial Responsibility Framework (FRF) was established in 2010 through amendments to the Financial Administration and Audit (FAA) Act and the Public Bodies Management and Accountability (PBMA) Act, creating a comprehensive framework anchored by binding fiscal rules. The framework was later strengthened through further amendments to the FAA Act, most notably in 2014, which introduced escape clauses and formal procedures for suspending the fiscal rules. In 2021 the FRF was further reinforced with the establishment of the Independent Fiscal Commission (IFC) under the Independent Fiscal Commission Act, 2021. As a commission of Parliament the IFC is mandated to promote sound fiscal policy and to act as the pre-suspension validator of the fiscal impact of economic shocks, serving as the arbiter of Jamaica’s fiscal rules.