An International Monetary Fund (IMF) team led by Mauricio Villafuerte recently concluded a mission in Kingston, Jamaica, as part of the 2025 Article IV consultation. The meetings were held both in-person and virtually with various Jamaican government counterparts, private sector representatives, civil society members, and development partners from April 30 to May 7.
Mauricio Villafuerte highlighted that over the past decade, Jamaica has made significant strides in reducing public debt, stabilizing inflation and expectations, and strengthening its external position. "Jamaica has met recent global shocks and natural disasters in a manner that is agile, prudent, and supportive of growth," he stated.
Despite a decline in GDP during FY2024/25 due to hurricane Beryl and tropical storm Raphael impacting agriculture and tourism infrastructure, economic activity is expected to normalize as these effects diminish. Unemployment has reached an all-time low of 3.7 percent as of January 2025, while inflation aligns with the Bank of Jamaica's target band of 4-6 percent. The current account has maintained a modest surplus for two consecutive fiscal years bolstered by strong tourism revenues and high remittances.
Villafuerte noted that "the outlook points to growth settling at its potential rate once the FY2025/26 recovery is complete," although global risks such as tighter financial conditions and extreme weather events require continued vigilance.
The Jamaican authorities have been implementing sound macroeconomic policies supported by robust frameworks. A primary surplus is anticipated for FY2025/26 which would reduce public debt to around 65 percent of GDP by the end of the fiscal year—the lowest level in 25 years. The Bank of Jamaica's monetary policy approach has anchored inflation around the mid-point of its target band.
Further improvements are being made within policy frameworks including operationalization of a Fiscal Commission in 2025 which provides assessments on macroeconomic forecasts. Wage bill reform aims to enhance transparency within public sector compensation while tax administration improvements seek increased compliance.
Future efforts will focus on managing the wage bill without crowding out other fiscal priorities and improving public spending efficiency per recommendations from an Agile Public Expenditure assessment completed in June 2024. Additionally, reforms aim to deepen foreign exchange markets alongside measures fostering potential growth through tackling supply side constraints like crime reduction efforts or enhancing employment services.
"The IMF team is grateful to the Jamaican authorities and other counterparts for their hospitality and very productive discussions," Villafuerte concluded.