Last week, our article noted that the budget was credible, but Jamaica still needs a growth strategy that drives tax revenue. In her speech, Finance Minister Fayval Williams named her budget “A Moment of Consequence”, signifying a turning point when decisions truly make an impact.

One such turning point could be the financial sector reforms she announced, described as “unlocking capital for reconstruction and growth”. Notably, she described the small step of increasing the pension fund private asset limit from 5 per cent to 7.5 per cent of total assets as a “measured, reversible step to allow funds to begin reallocating to well-governed private investments that match their long-term liabilities”, with, subject to monitoring, a second phase to increase it to 10 per cent by April 2, 2027.

Based on $847 billion in assets, the first phase would allow an additional, roughly, $21 billion of long-term capital to be invested in private companies, while phase 2 could allow another $28 billion or, approximately, a combined $50 billion.

She also plans to raise the pension fund limit from 10 per cent foreign currency denominated securities by an additional 5 per cent for locally domiciled issuers — one key question is whether this includes the Government of Jamaica.

She announced plans to change the regulations for insurers to purchase publicly listed, rated, and collateralised securities. The revised framework will permit investment where instruments are secured by adequate collateral or where instruments are issued, secured, or guaranteed by a solvent company assessed to be investment-grade by a recognised rating provider and that meets a two-times fixed charges earnings test over the prior two years.

However, this is all meant to be part of a comprehensive capital-market agenda that includes a micro exchange and fixed-income trading for retail investors, for which the devil will be in the details.

A critical current gap in Jamaica is venture capital, as the over-40-year-old legislation needs updating. Unsurprisingly, countries that invest higher amounts of their gross domestic product (GDP) in venture capital tend to have faster growing, more flexible economies, so it may be appropriate for a small portion of the money mobilised by our capital markets to be invested in this area on a pooled basis. The other critical gap is infrastructure, and its medium-risk profile should justify larger allocations.

Growth that drives tax revenue still critical

However, capital market reforms are not enough to reach the faster 5 per cent growth that we need. In addition, one of the most important lessons from the successful 1980s tax reform was that “good tax reform requires a fiscal cushion”; meaning, we need to identify a non-distortionary source of tax revenue to help balance the political economy necessity of compensating winners and losers.

The announcement of the first revenue measures in a decade right after a hurricane prompted the Opposition spokesman on Finance Julian Robinson to question whether it was right to impose $18 billion in revenue measures. He also argued against the now-annual $11.4-billion withdrawal from the National Housing Trust (NHT), which has effectively become a new tax on employers as it is a permanent reduction in the capital provided by their employer contributions, and instead run a larger deficit to be financed by short-term local debt.

However, if a decision were made not to increase taxes this year, it is likely that higher taxes would have to be proposed over the next two to three years to meet our medium-term debt sustainability target, particularly if we believe the Government’s current low growth projections. In addition, Robinson’s suggestion on digital invoicing could not be implemented this fiscal year to offset a hypothetical withdrawal of the current tax package.

According to Ernst and Young’s tax director John Butler, “Electronic invoicing could be a meaningful upgrade to Jamaica’s General Consumption Tax (GCT) system — but only if done right. It should be phased in over time and designed to make compliance easier, not harder, particularly for smaller businesses. If it adds friction, it risks pushing more activity into informality rather than bringing it into the tax net.”

As the late great Deloitte tax guru Ethlyn Norton-Coke used to say, GCT should be treated like a “trust” — it’s not your money, so it should never be collected and not handed over. Digital invoicing goes beyond making sure receipts are legible and don’t fade immediately, and the more uniform the GCT system is “the less the chain is broken”, the easier it will be to track the transactions as Norton-Coke would say. Nevertheless, the focus on GCT and a Barbados-style “digital nomad” strategy is useful even if neither happens this year.

A potentially very powerful capital mobilisation initiative that could provide the critical fiscal cushion for “good” tax reform as opposed to just raising revenue to fill a fiscal gap would be to finally put some flesh on former Finance Minister Nigel Clarke’s ‘Bring Back Business’ initiative. Currently, the parent companies of thousands of Jamaican companies are located in offshore jurisdictions of St Lucia and Barbados. A similar strategy to that of the Junior Stock Exchange, namely phasing in the relevant taxation for local companies repatriating themselves over time, combined with appropriate reforms in areas such as dividend taxation, could create significant new revenue and capital mobilisation in Jamaica, particularly when combined with new capital-market development initiatives.

All this would require significant tax policy technical expertise, however, and should be a key part of a new partnership with the private sector and the Government. Other complementary initiatives — such as finally completing the regulations for the general partner/limited partner legislation as part of making Jamaica the jurisdiction of choice for private capital for “onshore” development in the Caribbean (not offshore like Cayman or Bermuda) — could accelerate the impact.

The key will be to create a strong partnership between the private sector and Government — as during Hurricane Melissa — which we once again need, with only two short months before the next hurricane season.

Keith Collister

The Government announced significant capital-market reforms during the 2026/27 Budget Debate.