In her opening speech at the 2026 Jamaica Stock Exchange 21st Regional Investments and Capital Markets Conference entitled ‘Government Priorities to Deepen Capital Market Development’, Finance Minister Fayval Williams clearly expressed her view that there was no point in the Government holding onto assets “if the private sector can manage them more efficiently for the benefit of the people of Jamaica ”. A view, she said, that was sometimes resisted by even fellow Cabinet members.

She cited the privatisation of TransJamaica Highway Limited and Wigton Windfarm Limited through initial public offerings and the securitisation of the revenues from the Kingston and Montego Bay airports.

She is, of course absolutely correct, as, for example, it was the Jamaican Government’s initially reluctant privatisation of its then loss-making hotels in the early to mid 1980s that led to the sharp growth of tourism in the second half of the 1980s and the subsequent expansion into the industry we have today.

As the minister noted, there is plenty of room for Jamaica to further deepen its capital market. Specifically, she argued there was upwards of $60 billion that could be unlocked from the existing $1.2 trillion in pension and life insurance assets, suggesting an additional 5 per cent allocation. This capital would be particularly powerful if it was private equity that complemented the US$2.4 billion of the international financial institution support package earmarked for private sector investments.

As she suggested, the Government needs to develop a pipeline of public-private partnerships for private investors, which could include hospitals and schools. She also emphasised the importance of the micro stock market initiative designed to complement our existing Junior Market. Noting that it needed to be a public-private partnership, she called on the Jamaica Stock Exchange to ensure it was “operationalised” by the second quarter of 2026.

A key question is: What should be Jamaica’s debt target in the context of Hurricane Melissa?

The minister faces key challenges in constructing this year’s budget post-Melissa. In its December 2025 interim fiscal policy paper, the Government signalled its intention to suspend the Fiscal Responsibility Framework for two years because of the negative economic impact of Hurricane Melissa, which, unsurprisingly, our Independent Fiscal Commission (IFC) has determined is valid. The original target, which we had effectively met early pre-Melissa, was that public debt should be 60 per cent of gross domestic product (GDP) or lower, no later than FY 2027/28, but the fiscal policy paper noted this would be postponed to FY 2029/30.

In the fiscal policy paper, debt is projected to rise to 68.2 per cent of GDP in FY 2025/26 but, under current policies, decline only slightly to around 67 per cent of GDP in FY2028/29. Thus, in the upcoming budget, one view is that it would be important for the Government to signal how it intends to put the fiscal accounts on a path to achieve the 60 per cent debt-to-GDP target by 2029/30.

In the fiscal policy paper, Minister Williams states firmly, “The Government remains committed, even more so during this crisis, to prudent fiscal management.” Elsewhere, the Government has repeatedly affirmed its commitment to fiscal discipline. This commitment — underpinned by a robust legislative and institutional fiscal responsibility framework and combined with our stellar track record over the last 10 years — earned Jamaica enormous international goodwill. This goodwill was decisive in the multilateral financial institutions pledging unprecedented sums of money to support our recovery and rebuilding effort in the immediate aftermath of the devastating Hurricane Melissa.

The challenge of the wage bill

One of the minister of finance’s key challenges in constructing the current budget is that, as noted by the independent fiscal commission (IFC), wage and salary expenditure as a percentage of tax revenues has risen steadily and is now projected to absorb over half (56 per cent) of tax revenue in the current fiscal year of 2025/26, having risen from 36.1 per cent in 2021/2022 and 47.9 per cent in 2024/2025. It is now projected to only decline to a still-very-high 52.9 per cent by 2028/29.

The IFC explicitly warns that wage spending can crowd out other critical spending areas and suggests expenditure rules to manage this risk; for example, recommending aligning wage growth more closely with labour productivity (the promised reform that never happened). It also suggests strengthening expenditure on critical growth enhancement areas, such as infrastructure and human capital.

Of particular note, the commission observes that protracted wage negotiations and the absence of a structured compensation negotiation cycle have increased fiscal uncertainty and complicated budget planning. Recent salary adjustments have already contributed to compensation out-turns exceeding budgeted amounts.

The need for fiscal discipline

The good news is that debt rating agencies are raising Jamaica’s credit rating even after one of the country’s largest ever negative economic shocks; however, this is being done with the expectation of a return to fiscal discipline.

In the fiscal policy paper projections, the primary surplus, which was 5.4 per cent of GDP in FY 2024/25, is projected to be eliminated in FY 2026/27 and recover to only 0.5 per cent of GDP in 2028/29.

This suggests there may be a need for a difficult fiscal adjustment, particularly without a substantial increase in growth. On the spending side, the Government will need to contain the wage bill, which has more than doubled in the last four years and is projected in the fiscal policy paper to rise by an additional 20 per cent during the next three years. On the revenue side, the Government has been able to count on substantial non-tax revenues in the past two years that may not be available going forward, with the obvious implications.

Finally, there is a high risk of being hit by another shock (natural disaster or otherwise) in the next four years that would push the debt target further in the future. In such a scenario, fiscal adjustment might be even more challenging, since, unlike in the current situation, the country would be facing the shock without significant buffers. This makes the role of the National Reconstruction and Resilience Authority particularly critical.

Keith Collister