## 1. Operational Debt Anchor in Jamaica

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### Context and recent policy developments
- Over the past decade Jamaica reduced public debt, lowered financing costs, anchored inflation, increased banks’ capital and liquidity, built up international reserves, and improved its external position through institutional reforms including a fiscal responsibility law, a fiscal commission, and an inflation targeting framework.
- Jamaica completed PLL/RSF arrangements in 2024/25; RSF/PLL measures included enhanced consolidated supervision of financial conglomerates, improved resolution framework, AML/CFT upgrades, improved data adequacy, accelerated transition to renewables, increased climate resilience, and strengthened climate focus in fiscal frameworks.
- The Independent Fiscal Commission (IFC) came into effect on January 1, 2025 (Fiscal Advisory Committee: chair + four members representing trade unions, civil society, academia, private sector). IFC tasks: assess macroeconomic and fiscal forecasts, consistency of the budget with fiscal rules, and debt sustainability; it issued a broadly positive assessment of the FY2025/26 budget in February.

### Recent macroeconomic developments and medium‑term outlook
- FY2024/25 GDP contraction: 0.7 percent (attributed to hurricane Beryl and tropical storm Raphael).
- Unemployment: 3.7 percent in January.
- Bank of Jamaica policy rate: rose to 7 percent during post-pandemic tightening and was lowered starting August 2024 as inflation fell toward target.
- Inflation (March 2025): headline 5.0 percent; core 3.9 percent.
- Net international reserves: about US$5.8 billion at end-March.
- External account: current account in surplus for the last three fiscal years; current account was negatively affected by Beryl/Raphael in FY2024/25.
- Public finances (FY2024/25): primary surplus estimated at 5.9 percent of GDP; public debt recently fell below 70 percent of GDP (authorities’ estimate).
- Key fiscal supports in FY2024/25: securitization of future revenue flows from Kingston airport and payout from CCRIF tropical cyclone and excess rainfall insurance.
- Sovereign spreads: around 160 bps in early May.
- Financial sector (end-2024): banks’ capital adequacy ratio 14.5 percent (minimum 10 percent); NPLs 2.5 percent of total loans; past due loans 3.2 percent of total loans; high-quality liquid assets nearly twice net cash outflows; liquid assets nearly three times the prescribed share of short-term liabilities.
- Projections and medium-term outlook:
  - Growth expected to recover in FY2025/26 and then settle at potential of 1.6 percent.
  - Primary surplus expected to remain above 4 percent of GDP over the medium term.
  - Debt expected to be about 60 percent of GDP by FY2027/28.
  - Inflation expected to stabilize at 5 percent in 2025.
  - Current account expected to settle close to a balanced position over the medium term.
  - Tax collections expected to remain stable; primary spending around 26 percent of GDP.
- Risks: tighter global financial conditions; lower growth in key tourism source markets; trade policy disruptions; extreme weather events (floods, hurricanes, earthquakes); disruptions to tourism or remittances. Upside risks: faster recovery from weather events; favorable tourism trends; favorable commodity prices.

### Debt dynamics, DSA results, and IMF exposures
- Baseline public debt path (percent of GDP, fiscal years): Actual 2023: 73.4; 2024: 69.2; 2025: 64.9; 2026: 62.4; 2027: 60.0; 2028: 57.7; 2029: 55.6; 2030: 53.4; 2031: 51.4; 2032: 49.4; 2033: 47.5; 2034: 45.4.
- Change in public debt (percent of GDP): -3.6, -4.2, -4.3, -2.5, -2.4, -2.3, -2.2, -2.2, -2.0, -2.0, -1.9, -2.0 (series aligned with years above).
- Gross financing needs (Percent of GDP): 4.5, 9.7, 5.9, 5.6, 6.7, 8.8, 6.4, 6.0, 6.0, 6.4, 5.9, 6.7 (series aligned with years above).
- DSA summary assessment: "Jamaica’s public debt is assessed to be sustainable." Debt stabilization in the baseline: Yes.
- Custom long-term climate spending scenario: assumption "an increase of 0.5 percent of GDP per year in climate risks-related spending"; impact: public debt and GFN increase relative to baseline but remain on a downward trajectory over a 20-year horizon.
- IMF credit exposure and ratios:
  - Outstanding credit to the Fund (end-2026) from RSF disbursements: SDR 574.4 million (150 percent of quota and 13.5 percent of the gross international reserves).
  - Outstanding credit remains at 150 percent of quota until 2034 when RSF principal payments start; even after RSF principal repayments begin, payments to the Fund remain below 2 percent of Jamaica’s gross international reserves.
  - Outstanding IMF credit (millions of SDRs): 2025: 583.8; 2026–2034: 574.4 repeated; 2035: 545.6; 2036: 488.2; 2037: 430.8; 2038: 373.3; 2039: 315.9; 2040: 258.5; 2041: 201.0; 2042: 143.6; 2043: 86.2; 2044: 28.7.
- Capacity to repay (CtR): Jamaica has an excellent track-record of meeting obligations to the Fund and CtR remains adequate under plausible shocks considered (see Annex XIII).

### Rationale and calibration for an operational medium‑term debt anchor
- Rationale:
  - The FRL mandates a debt-to-GDP target of 60 percent by FY2027/28 that functions as a statutory limit thereafter; maintaining debt at 60 percent could lead to occasional breaches following large economic shocks.
  - An operational debt anchor below 60 percent would provide a fiscal buffer to accommodate shocks and reduce the pro-cyclicality of fiscal policy; Jamaica's exposure to climate shocks further justifies prudence.
- Calibration methodology:
  - Stochastic debt sustainability analysis drawing macro paths from a multivariate normal distribution calibrated on annual data 2003–2023.
  - Two scenario structures:
    - Scenario 1: primary balance path broadly consistent with the February 2025 Fiscal Policy Paper, with a gradual reduction in the primary balance surplus from 5.9 percent of GDP in FY2024/25 to 3 ½ percent of GDP in FY2027/28.
    - Scenario 2: constant primary balance surplus of 3 ½ percent of GDP throughout the projection horizon (FY2024/25 to FY2028/2029).
  - Both scenarios assume a 10 percent probability of breaching the debt limit and a 6-years projection horizon; simulations do not account for contingent liabilities or stock-flow adjustments.
- Calibration results (exact figures):
  - Scenario 1: an initial debt level of 56 percent (operational debt anchor) would have ensured public debt does not breach the 60 percent debt limit with 90 percent probability under different shocks.
  - Scenario 2: an initial debt level of 51 percent (operational debt anchor) would have ensured public debt does not breach the 60 percent debt limit with 90 percent probability.
  - Staff’s analysis (Box 1 and Annex IX) suggests a medium-term debt anchor of 50 percent of GDP (or lower depending on updated assessments of emerging fiscal risks such as more severe and frequent natural disasters) would be appropriate for Jamaica.
- Legal implications:
  - Amending the FRL would be required to implement an operational debt anchor below the current 60 percent statutory target.
  - Escape clause trigger under the FRL: shocks must cause at least 1.5 percentage points decline in GDP.
  - Correction mechanism (Article 48CA): automatic adjustments of at least 0.75 percent of GDP stronger overall fiscal balance in the succeeding financial year compared with the overall fiscal balance needed to achieve the debt target.

### Policy recommendations and implementation guidance
- Recommendation on the debt anchor:
  - Adopt an explicit operational medium-term debt anchor set somewhat below the 60 percent of GDP ceiling to guide policy, ensure moderate debt levels, and create fiscal buffers for adverse events.
  - Staff support for a medium-term operational anchor of 50 percent of GDP (or lower depending on updated assessments of emerging fiscal risks), with recognition that analytic endorsement by the IFC is appropriate.
  - The operational debt anchor would not alter the 60 percent debt ceiling; explicit escape clauses and a “catch-up” rule to return debt to its previous path after an escape would continue to apply to the 60 percent ceiling.
- Design and implementation guidance:
  - Reach the anchor on the basis of a smooth primary deficit path which avoids sudden fiscal easing and large expansions.
  - IFC should assess benefits and calibration of the debt anchor, including in the context of heightened uncertainties.
  - Consider statutory language describing both the debt limit (60 percent) and the operational anchor (e.g., 50 percent) and a transitional arrangement to converge to the operational anchor; when public debt reaches the operational anchor, review the overall fiscal balance rule and consider a primary balance operational rule consistent with stabilizing public debt at the anchor.
- Complementary fiscal measures and institutions:
  - Maintain planned fiscal path under the MTFF and the FRL to meet 60 percent of GDP by FY2027/28.
  - Strengthen public finance data coverage and recording practices (e.g., record NMIA securitization as debt accumulation under GFSM 2014).
  - Monitor contingent liabilities from public bodies and natural disaster risks; maintain buffers.
  - Undertake parametric reforms of public pension plans informed by triennial actuarial reviews; continue to monitor health-care cost growth trends.
  - Continue liability management operations, buybacks, and maturity extension to reduce near-term financing needs and refinancing risks (examples: 2019 buybacks ~ "around US$1 billion"; J$ global bond Nov 2023 "J$ 46.6 billion (or US$ 0.3 billion) coming due in 2030"; April 2024 IDB loan conversion "reducing the foreign currency component of public debt by US$ 92.5 million").
- Climate‑related considerations:
  - Given climate exposure, a lower operational anchor is warranted if emerging fiscal risks (more severe/frequent natural disasters) materialize.
  - Custom/climate scenarios considered: natural disaster shock calibrated as "a one-off increase of 8.8 percentage points of GDP"; climate spending scenarios adding "an increase of 0.5 percent of GDP per year" (custom) or standardized additions of 0.4 percent of GDP (long run) were analyzed; these raise debt/GFN relative to baseline but maintain downward debt trend under baseline fiscal settings.

### Key statistics and exact figures cited (selected)
- Debt target/debt limit: 60 percent of GDP by FY2027/28.
- Recommended operational debt anchor: 50 percent of GDP (or lower depending on emerging fiscal risks).
- Historical debt: 144 percent in FY2012/13; 73 percent of GDP at end-FY2023/24; initial public debt level used in projections: 73.4 percent of GDP in FY2023/24.
- Primary balance assumptions for calibration:
  - Scenario 1: primary balance surplus declines from 5.9 percent of GDP in FY2024/25 to 3 ½ percent of GDP in FY2027/28.
  - Scenario 2: constant primary balance surplus of 3 ½ percent of GDP from FY2024/25 to FY2028/2029.
- Calibration parameters:
  - Probability of breaching the debt limit: 10 percent.
  - Projection horizon: 6-years.
  - Scenario 1 operational anchor for 90 percent non-breach: initial debt level of 56 percent.
  - Scenario 2 operational anchor for 90 percent non-breach: initial debt level of 51 percent.
- Additional DSA shock calibrations and figures referenced:
  - Natural disaster shock calibration: "a one-off increase of 8.8 percentage points of GDP".
  - Government deposits accumulation: "around 4 ½ percent of GDP in FY2023/24".
  - Gross international reserves: 5,826 (US$ millions, fiscal-year series, 2024/25).

*Source: IMF staff report excerpt, "1. Operational Debt Anchor in Jamaica" (chapter content provided).*

### 1. Operational Debt Anchor in Jamaica ___________________________________________________________ 9

### 1. Operational Debt Anchor in Jamaica

### Context and recent policy developments
- Over the past decade Jamaica has reduced public debt, lowered financing costs, anchored inflation, increased banks’ capital and liquidity, built up international reserves, and improved its external position through institutional reforms including a fiscal responsibility law, a fiscal commission, and an inflation targeting framework.
- Jamaica completed PLL/RSF arrangements in 2024/25; measures under the PLL/RSF included: enhanced consolidated supervision of financial conglomerates, improved resolution framework, AML/CFT upgrades, improved data adequacy, accelerated transition to renewables, increased climate resilience, and strengthened climate focus in fiscal frameworks.
- Management is not recommending initiation of a Post-Financing Assessment (PFA) for Jamaica despite the RST threshold condition because Jamaica has strong fundamentals and policy frameworks; Jamaica’s capacity to repay the Fund is projected to be adequate (see Annex XIII).

### Recent macroeconomic developments and outlook
- FY2024/25 GDP contraction: 0.7 percent (attributed to hurricane Beryl and tropical storm Raphael).
- Unemployment: 3.7 percent in January.
- Bank of Jamaica (BOJ) policy: policy rate rose to 7 percent during post-pandemic tightening and was lowered starting August 2024 as inflation fell toward target.
- Inflation (March 2025): headline 5.0 percent; core 3.9 percent.
- Net international reserves: about US$5.8 billion at end-March.
- External account: current account in surplus for the last three fiscal years; current account was negatively affected by Beryl/Raphael in FY2024/25.
- Public finances (FY2024/25): primary surplus estimated at 5.9 percent of GDP; public debt recently fell below 70 percent of GDP (authorities’ estimate).
- Key fiscal supports in FY2024/25: securitization of future revenue flows from Kingston airport and payout from CCRIF tropical cyclone and excess rainfall insurance.
- Sovereign spreads: around 160 bps in early May.
- Financial sector: banks’ capital adequacy ratio 14.5 percent at end-2024 (minimum 10 percent); NPLs 2.5 percent of total loans; past due loans 3.2 percent of total loans; high-quality liquid assets nearly twice net cash outflows; liquid assets nearly three times the prescribed share of short-term liabilities.
- Projections and medium-term outlook:
  - Growth expected to recover in FY2025/26 and then settle at potential of 1.6 percent.
  - Primary surplus expected to remain above 4 percent of GDP over the medium term.
  - Debt expected to be about 60 percent of GDP by FY2027/28.
  - Inflation expected to stabilize at 5 percent in 2025.
  - Current account expected to settle close to a balanced position over the medium term.
  - Tax collections expected to remain stable; primary spending around 26 percent of GDP.
- Risks: tighter global financial conditions, lower growth in key tourism source markets, trade policy disruptions, extreme weather events (floods, hurricanes, earthquakes), and disruptions to tourism or remittances. Upside risks include faster recovery from weather events, favorable tourism trends, and favorable commodity prices.

### Financial stability and resilience
- BOJ stress test results: banks resilient to deterioration in loan quality, equity price declines, higher bond yields, exchange rate depreciation, and interbank contagion effects.
- Macroprudential toolkit under development: limits on leverage ratios, liquidity coverage ratios differentiated by currency, limits on FX net open positions, limits on size of exposures between financial institutions.
- Ongoing priorities: implement Basel III standards, consolidated supervision, crisis resolution framework, and stronger controls for financial integrity.

### Debt dynamics, capacity to repay, and IMF exposures
- Jamaica’s outstanding credit to the Fund (end-2026) arises from RSF disbursements and amounts to SDR 574.4 million (150 percent of quota and 13.5 percent of the gross international reserves; Table 6).
- Outstanding credit remains at 150 percent of quota until 2034 when RSF principal payments start; even after RSF principal repayments begin, payments to the Fund remain below 2 percent of Jamaica’s gross international reserves.
- Jamaica has an excellent track-record of meeting obligations to the Fund and its capacity to repay (CtR) remains adequate under plausible shocks (see Annex XIII).

### Policy discussions — strengthening fiscal institutions and operational debt anchor
- Fiscal trajectory:
  - FY2025/26 primary surplus projected at 5.2 percent of GDP, leading public debt to fall to 65 percent of GDP by end-FY2025/26 (authority estimate).
  - Authorities expect public debt to reach the Fiscal Responsibility Law (FRL) ceiling of 60 percent of GDP by FY2027/28 (authorities’ estimation).
  - Public debt is assessed to be sustainable (Annex IV).
- Independent Fiscal Commission (IFC):
  - IFC came into effect on January 1, 2025, overseen by a Fiscal Advisory Committee (chair + four members representing trade unions, civil society, academia, private sector).
  - IFC tasks: assess macroeconomic and fiscal forecasts, consistency of the budget with fiscal rules, and debt sustainability; it issued a broadly positive assessment of the FY2025/26 budget in February.
- Recommendation: strengthen the FRL by adopting an explicit operational medium-term debt anchor set somewhat below the 60 percent of GDP ceiling to guide policy, ensure moderate debt levels, and create fiscal buffers for adverse events.
  - The operational debt anchor would not alter the 60 percent debt ceiling; explicit escape clauses and a “catch-up” rule to return debt to its previous path after an escape would continue to apply to the 60 percent ceiling.
  - The benefits and calibration of the debt anchor should be assessed by the IFC, including in the context of heightened uncertainties.
  - Staff’s analysis (Box 1 and Annex IX) suggests a medium-term debt anchor of 50 percent of GDP (or lower depending on updated assessments of emerging fiscal risks such as more severe and frequent natural disasters) would be appropriate for Jamaica.

### Other fiscal measures and public sector compensation
- Wage bill reform (completed in FY2024/25):
  - Increased gross wage bill by 3.7 percentage points of GDP.
  - Offsets: reduced programme spending by 1 percent of GDP; higher personal income tax receipts of 1 percent of GDP (as salary increases moved employees into higher tax brackets).
  - Wage bill expected to remain around 13½ percent of GDP over the medium term, contingent on careful application of planned performance management framework (to become operational in FY2025/26).

*Source: IMF staff report excerpt, "1. Operational Debt Anchor in Jamaica" (chapter content provided).*

### Box 1. Operational Debt Anchor in Jamaica

### Box 1. Operational Debt Anchor in Jamaica

### Rationale for an operational debt anchor
- Jamaica's public debt-to-GDP ratio is rapidly approaching the 60 percent target mandated by the Fiscal Responsibility Law (FRL) for FY2027/28.
- Maintaining debt at the FRL-mandated 60 percent of GDP level could lead to occasional breaches following large economic shocks.
- An operational debt anchor below 60 percent of GDP would provide a fiscal buffer to accommodate shocks and reduce the pro-cyclicality of fiscal policy.
- Jamaica's exposure to climate shocks further justifies the need for a prudent operational debt anchor to safeguard fiscal sustainability.

### Recommended anchor and legal implications
- Adopt an operational debt anchor of 50 percent of GDP (or lower depending on updated assessment of emerging fiscal risks such as more severe and frequent natural disasters).
- Amending the FRL would be required to implement an operational debt anchor below the current 60 percent of GDP statutory target.

### Advantages of an operational debt anchor versus a fiscal balance rule
- An operational debt anchor mitigates excessive pro-cyclicality in fiscal policy and helps ensure debt sustainability under adverse scenarios.
- A fiscal balance rule, while simple and easy to communicate, may lead to a pro-cyclical fiscal stance and is therefore considered inferior to an operational debt anchor in this context.

### Implementation guidance and design features
- The anchor should be reached on the basis of a smooth primary deficit path which avoids sudden fiscal easing and large expansions.
- A debt anchor of 50 percent of GDP is shown (Staff analysis, Annex IX) to help ensure that public debt remains below the 60 percent of GDP limit with high probability under different shock scenarios.
- The approach balances flexibility to accommodate shocks and credibility to avoid breaching the statutory debt limit.

### Key points from staff analysis
- Adoption of an operational debt anchor would enhance fiscal policy risk management.
- A lower operational anchor creates a buffer that reduces the likelihood of breaching the FRL-mandated 60 percent of GDP after large shocks.

*Source: Box 1. Operational Debt Anchor in Jamaica (from 1jamea2025001-print-pdf).*

### 34.      Supply side constraints continue to act as a persistent headwind to growth.

### 34.      Supply side constraints continue to act as a persistent headwind to growth.

### Crime
- Authorities have modernized law enforcement infrastructure and operations by investing and modernizing police facilities, investing in technology and communication systems, and increasing training resources.
- Jamaica joined an IDB-sponsored Alliance for Security, Justice and Development and intends to share criminal records with other members and engage in joint actions against transnational crime.
- Addressing crime requires an integrated, multifaceted, and sustained response:
  - Strengthen the legislative framework to target serious crimes.
  - Reimagine social intervention strategies.
  - Enhance law enforcement capacity to support effectiveness.
- Authorities noted significant progress with crime reduction achieved in the last year.

### Competition
- Implementation of the Fair Competition Act should increase competition across the economy.
- A reduced state footprint and lower administrative burdens for businesses could foster entry of new firms and enhance resource allocation.

### Human capital
- Measures to improve educational outcomes include:
  - Increased grants for school attendance.
  - Expansion of the school meals program.
  - Better transportation for students in rural areas to improve high school graduation rates.
  - Potential expansion of scholarships for tertiary education.

### Infrastructure
- A new investment program to improve the road network aims to improve infrastructure and logistics.
- The government is working with the International Finance Corporation to further improve roads, water, healthcare, water and sanitation, and renewable energy.

### Open trade and border management
- Scope exists to improve cooperation among border agencies and streamline border clearance through simpler customs regulations and improved data systems.

### Labor market and social protection
- Authorities are working to establish a system of unemployment insurance and strengthen employment services including job counseling and job matching.
- The project intends to create an integrated information system to improve implementation of social assistance programs with support from the World Bank.

### Environmental policy, pollution control, and low-carbon adoption
- Measures introduced:
  - Parliament increased fines and custodial sentences for environmental offences.
  - Controls of pollution by the bauxite and alumina industry are being strengthened.
  - Import duties on electric motorbikes have been halved.
- Increasing renewable use is expected to lower energy costs, improve network reliability, and reduce vulnerability to global energy price shifts.
- Climate-related fiscal risk mitigation measures include:
  - Strengthening the Public Investment Management (PIM) system including climate sensitive project appraisal and selection (including for PPPs).
  - Strengthening oversight of public bodies from a climate-aware perspective.
  - Climate-risk informed land use planning and building codes.
  - Use of geographic information systems (GIS) in mapping hazards and asset exposures.
  - Planned introduction of Climate Budget Tagging in budget preparation and reporting.
  - Development of asset registers with valuations.
  - Building the capacity of MDAs on climate-aware planning.

### RSF (Resilience and Sustainability Facility) and climate financing
- The RSF, through long-term financing, has supported Jamaica’s goal of making the economy more resilient to climate change (Annex XII).
- The government met twelve reform measures under the RSF ranging from analysis of climate-related fiscal risks and reforms to improve the public sector investment framework to introduction of incentives for individuals’ investment in renewable energy and a framework for green-bond issuance.
- These measures have the potential to catalyze climate financing going forward.
- Following the 2023 roundtable, the Development Bank of Jamaica (DBJ) and the International Finance Corporation signed an MoU to establish a blue-green financing facility.
  - With financial support from the Green Climate Fund, the DBJ expects to launch this facility in 2026 with the goal of providing up to 2 percent of GDP in new financing for low carbon projects.

### Statistics and data
- Authorities have a comprehensive action plan to improve statistics.
- Following a Special Data Dissemination Standards (SDDS) assessment, an action plan has been developed to work toward subscribing to the SDDS.
- The statistics agency is working on a restructuring plan, dedicating resources to attract qualified staff, close capacity gaps, and improve data systems.
- Authorities reiterated their commitment to SDDS subscription and the need to reform the statistical agency.

### Authorities’ views
- Authorities agreed that identified supply side constraints continue to act as barriers to growth and that fostering growth remains a priority.
- They emphasized that pursuing policies aimed at macroeconomic stability through debt sustainability will contribute to strengthened growth prospects.
- Commitments highlighted:
  - Enhance public institutions and the business environment to boost inclusive growth.
  - Reduce crime and address education, infrastructure, and competition issues to improve productivity.
  - Introduce unemployment insurance, strengthen employment services, and social assistance programs.
  - Continue the ambitious climate resilience agenda building on reform measures completed under the RSF.
  - Pursue SDDS subscription and reform of the statistical agency to aid policy formulation and evaluation.

### Staff appraisal and macroeconomic context
- Over more than a decade, Jamaica has implemented sound macroeconomic policies supported by strong policy frameworks, allowing accumulation of meaningful policy buffers, reduction of public debt, anchoring of inflation, and improvement in the external position.
- Recent policy efforts strengthened fiscal responsibility, public sector compensation effectiveness, tax and customs administration, financial oversight, and climate resilience in the context of recently completed PLL/RSF arrangements.
- The economy declined in FY2024/25 due to weather events, is rebounding this year, and is projected to grow at its potential rate with risks broadly balanced.
  - Recovery supported by rebound in agriculture and tourism and spillovers to other sectors.
  - Risks: extreme weather events (downside for tourism and agriculture), trade policy shocks, disruptions to tourism or remittances.
  - Upside risks: faster-than-expected recovery from recent weather events, favorable tourism trends, favorable commodity price developments.

### Fiscal and financial policy points
- Maintaining primary fiscal surpluses to reach the FRL’s ceiling of 60 percent of GDP by FY2027/28 remains essential.
- Staff suggests incorporating an explicit operational medium-term debt anchor in the FRL at a level below 60 percent of GDP to guide policy and ensure debt is kept at moderate levels, creating fiscal buffers; the timeline for adoption should be assessed given heightened uncertainties.
- Fiscal policy framework improvements:
  - The IFC became operational in January 2025 and assessed consistency of current fiscal plans with the FRL.
  - The A-PEFA assessment was completed in June 2024 with recommendations to enhance public financial management.
  - Reforms of tax and customs administration support revenue mobilization; sound debt management continues.
  - Wage bill reform eliminating distortions and improving transparency and competitiveness of public pay to help retain skilled employees was completed last FY.
- Monetary and financial policy:
  - Staff supports the BOJ’s cautious data-dependent monetary policy and notes scope to lower the policy rate but recommends caution due to heightened global uncertainties.
  - An inflation targeting regime with a strong international reserves position and stable FX markets has served Jamaica well.
  - Policy directions: deepen FX markets by reducing surrender requirements and scaling back the BOJ’s FXI; deepen capital markets; further de-dollarize the economy; boost banking sector competition.
  - Adoption of Basel III, expansion of the BOJ supervisory remit, and unification of financial supervision under a twin-peaks regime are progress in the right direction.
  - Jamaica exited FATF’s increased monitoring (grey list) in June 2024; authorities continue to strengthen AML/CFT and are preparing for the fifth round of the Mutual Evaluation Process (expected by mid-2026).

### Multipronged approach to overcome supply-side constraints
- Low productivity from resource misallocation is amplified by structural impediments: high crime, barriers to competition, poor educational outcomes, inadequate infrastructure, and barriers to trade.
- Authorities are addressing these barriers through:
  - Product and labor market reforms.
  - Education reforms.
  - Infrastructure investments.
  - Trade facilitation measures.
  - Climate-aware reforms, including completing RSF reform measures completed last September.
- These reforms have the potential to catalyze private sector financing for climate-related investment.

*Source: IMF mission text (excerpts).*

### 47.      It is recommended that the next Article IV consultation takes place on the standard

### 1jamea2025001-print-pdf - 47. It is recommended that the next Article IV consultation takes place on the standard 12-month cycle.

### Macroeconomic overview and recommendation
- It is recommended that the next Article IV consultation takes place on the standard 12-month cycle.
- Population (2023): 2.84 million
- Per capita GDP (2023): US$6,850 (fiscal-year table), US$6,801 (calendar-year table)
- Unemployment rate (January 2025): 3.7%

### Real sector developments
- Real GDP growth (fiscal year series):
  - 2020/21: -11.0
  - 2021/22: 8.2
  - 2022/23: 4.7
  - 2023/24: 1.8
  - 2024/25: -0.8
  - 2025/26: 2.2
  - 2026/27–2029/30: 1.5, 1.5, 1.5, 1.5
- Nominal GDP growth (fiscal year series):
  - 2020/21: -8.1
  - 2021/22: 19.2
  - 2022/23: 18.6
  - 2023/24: 9.9
  - 2024/25: 5.3
  - 2025/26: 8.3
  - 2026/27–2029/30: 6.6, 6.6, 6.3, 6.3
- Consumer price index (end of period, fiscal year):
  - 2020/21: 5.2
  - 2021/22: 11.3
  - 2022/23: 6.2
  - 2023/24: 5.6
  - 2024/25–2029/30: 5.0, 5.0, 5.0, 5.0, 5.0
- Calendar-year real GDP growth:
  - 2020: -9.9
  - 2021: 4.6
  - 2022: 5.2
  - 2023: 2.6
  - 2024: -0.7
  - 2025: 2.1
  - 2026–2029: 1.5, 1.5, 1.5, 1.5

- Selected qualitative points from figures:
  - Real GDP growth stalled in 2024 due to hurricane Beryl and tropical storm Raphael.
  - Unemployment has fallen to historic lows.
  - Tourism and hospitality sector fully recovered from the pandemic.
  - Most sectors experienced a contraction in activity in 2024.
  - Output gap opened up prior to Beryl/Raphael’s impact and is estimated to have closed in 2024.
  - Inflation is within the target band.

### Fiscal sector developments (central government and public sector)
- Key fiscal ratios (percent of GDP, fiscal-year basis):
  - Budgetary revenue: 29.5 (2020/21), 31.0 (2021/22), 30.1 (2022/23), 30.6 (2023/24), 33.3 (2024/25), 31.7 (2025/26)
  - Tax revenue: 25.9 (2020/21), 26.5 (2021/22), 27.3 (2022/23), 27.5 (2023/24), 27.8 (2024/25)
  - Budgetary expenditure: 32.6 (2020/21), 30.1 (2021/22), 29.8 (2022/23), 30.5 (2023/24), 33.0 (2024/25)
  - Primary expenditure: 26.0 (2020/21), 24.2 (2021/22), 24.3 (2022/23), 24.8 (2023/24), 27.3 (2024/25)
  - Interest payments: 6.6 (2020/21), 5.9 (2021/22), 5.5 (2022/23), 5.7 (2023/24), 5.6 (2024/25)
  - Budget balance: -3.1 (2020/21), 0.9 (2021/22), 0.3 (2022/23), 0.0 (2023/24), 0.3 (2024/25)
  - Central government primary balance: 3.5 (2020/21), 6.8 (2021/22), 5.8 (2022/23), 5.7 (2023/24), 5.9 (2024/25)
  - Public sector balance: -3.2 (2020/21), 1.1 (2021/22), 1.7 (2022/23), 2.3 (2023/24), 2.0 (2024/25)
  - Public debt (FRL definition, %GDP): 109.7 (2020/21), 94.2 (2021/22), 77.0 (2022/23), 73.4 (2023/24), 69.2 (2024/25)
- FY aggregates (J$ millions, selected):
  - Budgetary Revenue and Grants (2024/25): 1,060,442
  - Tax revenue (2024/25): 884,622
  - Budgetary Expenditure (2024/25): 1,050,900
  - Primary expenditure (2024/25): 870,891
  - Interest (2024/25): 180,009
  - Budget Balance (2024/25): 1,172 (surplus)
  - Capital expenditure (2024/25): 57,456
- Qualitative points from figures:
  - Central government’s overall balance is in surplus due to elevated tax revenues from strong direct tax collections.
  - Primary spending edged up in FY 23/24.
  - Capital spending continued to remain subdued.
  - Public debt is on a firm path to meet the FRL debt target.

### External sector developments (balance of payments)
- Current account (US$ millions):
  - 2020/21: -173
  - 2021/22: -101
  - 2022/23: 345
  - 2023/24: 610
  - 2024/25: 524
  - 2025/26: 273
  - 2026/27: 125
  - 2027/28: -47
  - 2028/29: -99
  - 2029/30: -35
- Trade balance (US$ millions):
  - 2020/21: -2,736
  - 2021/22: -3,267
  - 2022/23: -4,578
  - 2023/24: -4,396
  - 2024/25: -4,463
- Services (net, US$ millions):
  - 2020/21: -225
  - 2021/22: 971
  - 2022/23: 1,635
  - 2023/24: 1,848
  - 2024/25: 1,848
- Travel (net, US$ millions):
  - 2020/21: 608
  - 2021/22: 2,368
  - 2022/23: 3,714
  - 2023/24: 4,060
  - 2024/25: 4,038
- Remittances / secondary income (US$ millions):
  - 2020/21: 3,200
  - 2021/22: 3,556
  - 2022/23: 3,542
  - 2023/24: 3,444
  - 2024/25: 3,440
- Gross international reserves (US$ millions):
  - Fiscal-year series: 4,244 (2020/21), 4,324 (2021/22), 4,685 (2022/23), 5,232 (2023/24), 5,826 (2024/25)
  - Calendar-year series: 4,081 (2020), 4,833 (2021), 4,520 (2022), 4,869 (2023), 5,633 (2024)
- Real-effective exchange rate: recently slightly appreciated (figure note).

- Qualitative points from figures:
  - Remittances receipts have stabilized and remain above pre-Covid levels.
  - Tourism has recovered across the board.
  - Trade balance has improved due to lower imports and a pickup in exports.
  - FDI in tourism continued to grow in 2023 but overall FDI remains below historical levels.

### Monetary and financial sector developments
- Banking system and credit:
  - Banking system deposits have been growing steadily with individuals and businesses dominating.
  - Private credit continues to grow reflecting economic rebound and good prospects going forward.
  - Depository institutions retain liquidity above the required minimum.
  - Profitability is moderate but steady.
  - NPL ratio is very low and provisioning is sufficient.
  - Capital buffers are kept well above the minimum and sufficient to absorb potential losses.

- Monetary aggregates (fiscal-year basis, J$ billions):
  - Broad Money (M3): 1,445.0 (2020/21), 1,631.2 (2021/22), 1,791.4 (2022/23), 1,953.7 (2023/24), 2,074.7 (2024/25)
  - Net Foreign Assets (J$ billions): 402.4 (2020/21), 505.7 (2021/22), 560.0 (2022/23), 772.0 (2023/24), 881.8 (2024/25)
  - Net Domestic Assets (J$ billions): 1,042.6 (2020/21), 1,125.4 (2021/22), 1,231.4 (2022/23), 1,181.7 (2023/24), 1,192.8 (2024/25)
- Financial soundness indicators (selected, banking sector):
  - NPLs/loans: 6.5 (2010), 8.9 (2011), 7.0 (2012), 5.4 (2013), 5.0 (2014), 4.1 (2015), 2.9 (2016), 2.6 (2017), 2.6 (2018), 2.2 (2019), 2.8 (2020), 2.9 (2021), 2.5 (2022), 2.5 (2023), 2.5 (2024)
  - Capital Adequacy Ratio (CAR): 18.2 (2010), 16.1 (2011), 14.1 (2012), 15.1 (2013), 15.9 (2014), 14.9 (2015), 14.7 (2016), 15.3 (2017), 14.5 (2018), 14.3 (2019), 14.3 (2020), 14.2 (2021), 14.6 (2022), 14.5 (2023), 14.5 (2024)
  - Return on average assets: 2.5 (2010), 3.9 (2011), 2.4 (2012), 2.0 (2013), 2.1 (2014), 2.0 (2015), 2.9 (2016), 2.7 (2017), 3.3 (2018), 3.0 (2019), 1.3 (2020), 2.2 (2021), 0.4 (2022), 0.8 (2023), 0.3 (2024)

### IMF credit and external financing scenario (Tables and projections)
- Fund Obligations Based on Existing Credit (millions of SDRs, selected years):
  - Principal: 124.0 (2025), 9.4 (2026), 0.0 (2027–2034), 28.7 (2035), 57.4 (2036–2044 repeated)
  - Charges and interest: 29.1 (2025), 36.7 (2026), 36.5 (2027), 36.5 (2028), 36.4 (2029), 36.5 (2030) ... continuing pattern through 2044 with specified values
  - Total Obligations Based on Existing Credit (millions of SDRs): 153.2 (2025), 46.1 (2026), 36.5 (2027), 36.5 (2028), 36.4 (2029), 36.5 (2030) ... continuing pattern through 2044
- Outstanding IMF Credit Based on Existing Drawings (millions of SDRs):
  - 2025: 583.8
  - 2026–2034: 574.4 repeated through 2034, then declining: 545.6 (2035), 488.2 (2036), 430.8 (2037), 373.3 (2038), 315.9 (2039), 258.5 (2040), 201.0 (2041), 143.6 (2042), 86.2 (2043), 28.7 (2044)
- Ratios (selected):
  - Outstanding IMF credit as percent of exports of goods and services: 10.8 (2025), 10.2 (2026), 10.0 (2027), 9.6 (2028), 9.3 (2029), 9.0 (2030) ... declining over time
  - Outstanding IMF credit as percent of gross international reserves: 13.5 (2025), 13.1 (2026), 13.0 (2027), 12.9 (2028), 12.8 (2029), 12.7 (2030)
  - Outstanding IMF credit as percent of government revenue: 11.5 (2025), 11.5 (2026), 11.1 (2027), 10.7 (2028), 10.3 (2029), 9.8 (2030)
  - Outstanding IMF credit as percent of quota: 152.5 (2025), 150.0 (2026–2034), then declining to 142.5 (2035), 127.5 (2036), 112.5 (2037), 97.5 (2038), 82.5 (2039), 67.5 (2040), 52.5 (2041), 37.5 (2042), 22.5 (2043), 7.5 (2044)
- Memorandum projections:
  - Exports of goods and services (US$ millions): 7,265 (2025), 7,541 (2026), 7,756 (2027), 8,003 (2028), 8,291 (2029), 8,602 (2030) ... rising through 14,403 (2044)
  - Gross international reserves (US$ millions): 5,826 (2025), 5,876 (2026), 5,926 (2027), 5,976 (2028), 6,026 (2029), 6,076 (2030) ... rising through 6,776 (2044)
  - Nominal GDP (US$ millions): 21,492 (2025), 22,318 (2026), 23,115 (2027), 23,887 (2028), 24,857 (2029), 25,866 (2030) ... rising through 45,924 (2044)

### Key quantitative snapshots and projections (selected)
- Unemployment rate (percent, fiscal-year basis): 8.9 (2020/21), 6.2 (2021/22), 4.5 (2022/23), 4.2 (2023/24)
- Gross international reserves (US$ millions, fiscal year): 4,244 (2020/21), 4,324 (2021/22), 4,685 (2022/23), 5,232 (2023/24), 5,826 (2024/25)
- Public sector debt (FRL definition, percent of GDP): 109.7 (2020/21), 94.2 (2021/22), 77.0 (2022/23), 73.4 (2023/24), 69.2 (2024/25)

*Source: Jamaican authorities; IMF staff estimates and projections, as presented in the provided content.*

### Annex I. Progress on 2024   Article IV Policy Recommendations

### Annex I–IV. Progress on 2024 Article IV Policy Recommendations and Related Assessments

### Growth Agenda — Progress and Actions
- Recommendation: Adopt policies to overcome factors hindering productivity associated with lack of skills, limited access to finance, high crime, and barriers to competition; strengthen social safety net and close gender gaps; pursue data improvement aiming at an SDDS subscription.
- Policy actions (ongoing):
  - Late 2024: Government launched a growth strategy with key pillars: human capital development; diversification of the country’s economic base and development of new industries; infrastructure development; improving the business environment; security; and inclusive growth.
  - Launched the Social Protection for Increased Resilience and Opportunity (SPIRO) project to strengthen social protection with support from the World Bank.
  - Data improvement efforts pursuing SDDS subscription.

### Climate Agenda — Progress and Actions
- Recommendation: Integrate climate risks into fiscal planning, incentivize investment in renewable energy, adopt a monitoring framework for data informing climate related stress testing, adopt a green bond issuance framework.
- Policy actions (ongoing):
  - RSF arrangement completed on August 30, 2024.
  - Continued efforts to catalyze private climate financing and secure investments in renewable energy.
  - Cooperation with development partners to leverage the RSF to secure private resources to climate proof the economy.

### Fiscal Sector — Progress and Actions
- Recommendation: Maintain a prudent fiscal stance to support reduction in public debt.
- Policy actions and outcomes:
  - FY2024/25 budget advanced to the FRL’s 60 percent of GDP debt target despite spending additional resources for hurricane recovery.
- Recommendation: Address distortions in public sector compensation within the existing fiscal envelope; enhance quality of public expenditure and manage debt to lessen risks.
  - Ongoing: Cost of public compensation overhaul was offset by reduced program spending and higher tax revenue as higher base salaries resulted in higher income taxes.
  - The A-PEFA was delivered in spring 2024 to improve the quality of public spending.
  - First ever international local currency bond issued in November 2023.
- Recommendation: Operationalize the Independent Fiscal Commission (IFC); continue reforms to strengthen tax and customs administration; improve financial management.
  - Ongoing: The IFC became operational in 2025.
  - Tax Administration enhanced digital capacity to enhance compliance.
  - Customs agency improved clearance procedures and adopted a risk management approach to border management.
  - ASYCUDA updated and a Single Window for Trade is in place.

### Monetary and Financial Sector — Progress and Actions
- Recommendation: Secure inflation convergence to its target with data-dependent monetary policy to entrench macroeconomic stability, promote growth, enhance capacity to face adverse shocks and anchor inflation expectations.
  - Ongoing: BOJ maintained data-dependent monetary policy; policy rate gradually lowered in line with macroeconomic developments supporting inflation convergence to the inflation target band.
- Recommendation: Advance adoption of Basel III requirements; prepare for a supervision mandate’s expansion to financial holding companies and credit unions; strengthen the special resolution regime (SRR); advance towards a twin-peaks supervisory regime.
  - Ongoing: BOJ continued rolling out pillar two; expansion of perimeter to financial holding companies and preparation for twin-peaks regime ongoing.
  - SRR law tabled in parliament by end-June 2024 (assisted by MCM/LEG TA).
  - Work ongoing on crisis management, consolidated supervision, and integration of climate risks in supervisory activities.
- Recommendation: Continue addressing weaknesses in AML/CFT framework per the plan agreed with FATF.
  - The Action Plan agreed with FATF was completed in early 2024.
  - Jamaica exited the FATF’s grey list in June 2024 and is preparing for the 5th round of the Mutual Evaluation Process.
- Recommendation: Advance JAM-DEX® (CBDC) adoption.
  - Ongoing: Footprint of JAM-DEX® is expanding; progress with use of POS machines for JAM-DEX® transactions.

### Risk Assessment Matrix — Key Risks, Likelihood, Impact, and Policy Responses
- External Risks:
  - Trade policy and investment shocks.
    - Likelihood: High
    - Impact if realized: Medium
    - Policy response: Calibrate monetary policy in a data-dependent manner with FX interventions to reduce volatility due to disorderly market conditions; develop contingency plans to protect priority spending should financing become limited without jeopardizing the medium-term fiscal framework anchored in the FRL.
  - Commodity price volatility.
    - Likelihood: Medium
    - Impact if realized: Medium
    - Policy response: Allow pass-through from international to domestic prices; provide targeted support to vulnerable households and firms while preserving fiscal sustainability.
  - Tighter financial conditions and systemic instability.
    - Likelihood: Medium
    - Impact if realized: Medium
    - Policy response: Apply data-dependent monetary policy to hold inflation within the target band and anchor inflation expectations; strengthen reserve buffers and limit interventions to curbing volatility; continue developing the FX market and FX related instruments to increase FX market resilience.
- Structural/Domestic Risks:
  - Climate change (extreme climate events).
    - Likelihood: Medium
    - Impact if realized: High
    - Policy response: Deploy Disaster Risk Management framework and the multilayered insurance scheme against climate events and related institutional arrangements to guide reconstruction efforts.
  - Deepening geoeconomic fragmentation.
    - Likelihood: High
    - Impact if realized: High
    - Policy response: Use data-dependent policy to control excess volatility due to disorderly market conditions; strengthen reserve buffers and protect macro stability without sacrificing priority spending; develop contingency plans if financing becomes limited; allow pass-through to domestic prices with targeted, temporary support for the neediest.
  - Cyberthreats.
    - Likelihood: Medium
    - Impact if realized: Medium
    - Policy response: Continue strengthening cyber security measures including legal, institutional, and strategic frameworks and cross-sector framework to combat cyberattacks.

### External Sector Assessment — Overall Findings and Policy Options
- Overall assessment: The external position of Jamaica in 2024 is assessed to have been broadly in line with the medium-term level implied by fundamentals and desirable policies.
- Key analytical points:
  - The current level of the real exchange rate would keep the NIIP sustainable according to the External Sustainability Approach.
  - The current account model suggests an exchange rate undervaluation of 37 percent, but the EBA-lite CA model does not fully consider Jamaica’s lower marginal propensity to consume from remittances and the large negative NIIP/GDP; staff assessment is informed by the External Sustainability (ES) model.
- Potential policy responses:
  - Address constraints to the export base by fostering tertiary education, enhancing trade facilitation, strengthening logistics, lowering crime, advocating in CARICOM for lower import tariffs, and seeking free trade agreements with countries outside the region.

### Foreign Assets and Liabilities — Position and Trajectory (selected figures)
- NIIP (2024 est.; % GDP): -116
- Gross Assets: 70
- Debt Assets: 33
- Gross Liabilities: 186
- Debt Liabilities: 71
- Background and assessment:
  - NIIP estimated to have continued to improve in 2023, falling to around -124 percent of GDP from -164 percent end-2018.
  - IIP liabilities dominated by direct investment (~50 percent of the total).
  - External debt mainly long-term and on a downward trend after the COVID shock in 2020.
  - Under the current baseline (constant real exchange rates) the NIIP would not deteriorate further in net present value terms and is assessed to be sustainable.

### Current Account — 2024 Outcomes and Model Results
- Background:
  - 2024 CA estimated at about 3.1 percent of GDP (compared to average of nil over the last five years).
  - Deficit in goods trade slightly increased in 2024 due to hurricane Beryl and tropical storm Raphael impacts on alumina, bauxite, and agricultural exports.
  - High tourism receipts and steady freight costs supported services trade balance.
  - Remittances have trended down in terms of GDP toward pre-pandemic levels.
- Remittances and related figures:
  - Remittances as a share of GDP averaged about 15 percent of GDP over the 5 years prior to the pandemic.
  - During the pandemic remittances averaged 21 percent of GDP.
  - In the medium-term remittances are expected to average about 16 percent of GDP.
- EBA-lite model indicators (2024):
  - CA-Actual: 3.1
  - Cyclical contributions (from model): (-)-0.1
  - Natural disasters and conflicts: (-)0.0
  - Adjusted CA: 3.2
  - CA Norm (from model): -7.1
  - Adjusted CA Norm: -7.1
  - CA Gap: 10.3
  - o/w Relative policy gap: 2.2
  - Elasticity: -0.3
  - REER Gap (in percent): -36.9  -5.2
- Assessment:
  - EBA-lite CA model points to a positive CA gap of 10.3 percent of GDP, largely driven by a persistently large residual and global factors.
  - Staff judgment: EBA-lite overestimates the CA deficit appropriate for Jamaica because it does not fully capture low MPC from remittances, need for precautionary savings for natural disasters, and tourism-dependence; the ES model informs a view that current and projected CA balances ensure external sustainability.

### Real Exchange Rate (REER)
- Background: Average REER in 2024 appreciated by 1.3 percent relative to 2023 and was broadly at its 2019 level.
- Assessment:
  - EBA-lite REER model suggests a real exchange rate undervaluation of about 5 percent fully due to the model residual.
  - Policy gap marginal and largely driven by global factors; model limitations mirror those under CA assessment.

### Capital and Financial Accounts — Flows and Policies
- Background (2024 estimates and policy changes):
  - Foreign direct investment estimated to have declined to 1.0 percent of GDP in 2024, down from 2 percent of GDP in 2023.
  - Net portfolio outflows from banks estimated at 1.9 percent of GDP.
  - Banks and corporates’ net outflows on other investments estimated at 0.1 percent of GDP.
  - BOJ removed absolute limits on the FX net open positions (NOP) of DTIs in November 2023.
  - Approval required for local corporate bond issuance in FX for issuance above US $20 million.
- Assessment:
  - Financing structure supports external stability: inflows dominated by FDI and long-term private debt; outflows largely public debt amortization.
  - Medium-term: benefit from more diversified FDI inflows to help export diversification outside tourism and mining.
  - Adjustments to FX NOP limits and loosening requirements for local FX issuances may improve FX market functioning but not materially affect capital flows.

### FX Interventions and Reserves Level
- Key figures:
  - Gross reserves: US$5.63 billion at end-2024, up from US$4.86 billion at end-2023.
  - NIR: US$5.58 bn at end-2024.
  - Reserves reached 95 percent of the ARA metric for non-floating exchange rate regimes at end-2024 (136 percent of the “floating” ARA metric).
- Background and assessment:
  - BOJ continued to accumulate international reserves through surrender requirements; FX sales helped limit volatility.
  - FX interventions net accumulative; BOJ recycles to the market FX acquired through surrender requirements and uses auctions to sell FX.
  - Incidence ratio of daily exchange rate movements indicates broadly balanced depreciation and appreciation incidences over the last year.
  - Reserves assessed as broadly adequate though marginally below the lower band of the recommended 100-120 percent of the ARA metric; adequacy mitigated by strong fiscal position, rapidly declining debt, and sound macroprudential regulations.
- Note: Jamaica’s de facto exchange rate regime was re-classified from “stabilized” to “crawl-like arrangement” effective March 26, 2024.

### Debt Sustainability — Key Findings
- Overall assessment: Jamaica’s public debt is sustainable.
- Key figures and trajectory:
  - Public debt declined to 73 percent of GDP in FY2023/24.
  - Fiscal Responsibility Law (FRL) debt target: 60 percent of GDP by FY2027/28.
  - Jamaica’s public debt fell from 110 percent of GDP in FY 2020/21 to 73 percent in FY2023/24.
- Context and risks:
  - Debt reduction underpinned by sustained fiscal consolidation efforts and prudent debt management.
  - Debt dynamics remain vulnerable to uncertainties linked to global commodity prices, natural disasters, and realization of contingent liabilities from public bodies.
  - Authorities committed to bringing public debt under the FRL definition below 60 percent of GDP by FY2027/28, with a modest two-year delay from the original FY2025/26 target date under FRL.

*Source: Annex I–IV, 1jamea2025001-print-pdf*

### 2.      The DSA baseline scenario reflects the medium-term macroeconomic assumptions,

### 1jamea2025001-print-pdf - 2.      The DSA baseline scenario reflects the medium-term macroeconomic assumptions,

### Baseline macroeconomic and fiscal assumptions
- Growth: "Following the recovery from the pandemic, growth is expected to converge to its potential over the medium term."
- Inflation: "Average inflation is projected to hover around 5 percent over the medium term, in line with the BOJ’s inflation target."
- Fiscal overall balance: "The fiscal overall balance is expected to be around 0 percent of GDP in the near term, in line with the MTFF and FRL targets."
- Interest payments: "Interest payments in relation to GDP are projected to fall in line with a declining debt-to -GDP ratio."
- External debt drivers: "External debt projections are based on a projected current account close to a balanced position over the medium term and planned disbursements of project loans by multilateral and bilateral creditors."
- Government deposits: "The authorities built high cash buffers through the accumulation of government deposits of around 4 ½ percent of GDP in FY2023/24, partly unwound to address significant gross financing needs in FY2024/25."

### Debt management actions and liability management
- 2019 buybacks: "In 2019, the Government of Jamaica conducted buybacks of outstanding global bonds coming due in 2022, 2025, and 2028, totaling around US$1 billion."
- 2045 reopening: "These buybacks, together with new bond issuances through the reopening of the global bond coming due in 2045, led to a substantial maturity extension."
- J$ global bond 2023: "In November 2023, the Government of Jamaica issued the first ever J$ denominated global bond for J$ 46.6 billion (or US$ 0.3 billion) coming due in 2030 to pay down outstanding US$ global bonds coming due in 2025 and 2028."
- Loan currency conversions 2024: "In April 2024, the Government of Jamaica executed the partial conversion of two US$ IDB loans to J$ loans, reducing the foreign currency component of public debt by US$ 92.5 million."
- Ongoing strategy: "As part of their medium-term debt strategy, the authorities plan to continue to conduct opportunistic liability management operations to further mitigate costs and risks in the public debt portfolio."
- Structural benefits: "The public debt risk profile is benefitting from ongoing efforts to reduce reliance on FX-denominated borrowing and the development of the local currency bond market."

### Medium-term risk analysis (mechanical signals and stress tests)
- Overall medium-term risk: "The medium-term risk analysis is low consistent with mechanical signals."
- Fan chart / solvency:
  - "The debt fan chart index—measuring medium-term solvency risks—points to a moderate level of risk, reflecting the elevated fan chart width due to a history of high volatility of public debt in Jamaica."
  - "The baseline debt trajectory is on a downward trend, and the probability of debt not stabilizing is assessed to be limited."
  - Natural disaster shock: calibrated as "a one-off increase of 8.8 percentage points of GDP consistent with the estimated damages from tropical cyclones 'Charley' and 'Ivan' in 2004." "Such natural disaster shock would only temporarily increase public debt without jeopardizing the downward trend in public debt over the medium term."
- Gross Financing Needs (GFN) / liquidity:
  - "The GFN financeability index—measuring medium-term liquidity risks—indicates a low risk."
  - "Medium-term GFN are expected to remain contained as fiscal consolidation progresses."
  - Short-term peaks: "GFN in FY2024/25 and FY2028/29 increase due to domestic and global bonds maturing simultaneously."
  - Liability management reduces roll-over and exchange rate risk, e.g., issuing a "J$ denominated global bond to reduce the reliance on FX-denominated borrowing."

### Long-term risks and customized scenario
- Long-term risk assessment: "Long-term risk is assessed to be moderate."
- Custom scenario on climate-related spending:
  - Assumption: "an increase of 0.5 percent of GDP per year in climate risks-related spending arising from adaptation and mitigation investment needs."
  - Impact: "In that scenario, public debt and GFN will increase relative to the baseline but will be on a downward trajectory over the 20-year horizon."
- Health and pensions:
  - "While the current health care expenditure policies would not pose significant sustainability concerns, pension expenditures under the current system would lead to larger GFNs and an upwards debt trajectory in the long run."
  - Policy implication: "This points to the need to undertake parametric reforms of the current public pension system. Actuarial reviews, scheduled to take place every three years, should continue to inform parametric reforms to the National Insurance Scheme, while parametric adjustments to the pension scheme for public workers would reduce its fiscal costs."

### DSA summary assessment and outlook
- Sustainability conclusion: "Jamaica’s public debt is assessed to be sustainable."
- Vulnerabilities: "The projected debt trajectory remains vulnerable to the high degree of uncertainty from the size and duration of ensuing global shocks and the associated risks to growth, interest rates, exchange rate and fiscal revenues."
- Policy strengths: "However, the strong policy track record, the authorities’ commitment to meet the medium-term debt target sooner should growth overperform, and prudent debt management mitigate potential risks."
- Overall sovereign stress assessment (table summary):
  - "Overall...Moderate"
  - "Near term 1/ ... (not applicable in cases where there is a disbursing IMF arrangement)"
  - "Medium term Low"
  - "Fanchart Moderate"
  - "GFN Low"
  - "Long term...Moderate"
  - "Debt stabilization in the baseline Yes"
  - Commentary excerpt: "After the Covid-19 shock, sovereign debt promptly resumed its declining trend and is expected to decline under 60 percent of GDP by FY2027/28, as stipulated under the FRL. GFN needs over the medium term are low and the medium-term liquidity risks as analyzed by the GFN Module are low."

### Key numerical data and table extracts (preserved exactly as in source)
- Government deposits accumulation: "around 4 ½ percent of GDP in FY2023/24"
- 2019 buybacks: "around US$1 billion"
- J$ global bond Nov 2023: "J$ 46.6 billion (or US$ 0.3 billion) coming due in 2030"
- IDB loan conversion April 2024: "reducing the foreign currency component of public debt by US$ 92.5 million"
- Natural disaster shock calibration: "a one-off increase of 8.8 percentage points of GDP"
- Custom scenario climate spending increase: "an increase of 0.5 percent of GDP per year"
- Selected table lines (verbatim, as presented):
  - "Total14296.3100.073.41995.03286.32405.510.215.711.1"
  - "External9021.363.146.31393.91665.31208.87.28.05.6"
  - "Multilateral creditors 3461.024.217.8771.7966.5487.54.04.62.2"
  - "Bilateral Creditors665.54.73.4105.7137.6112.10.50.70.5"
  - "Bonds4894.934.225.1516.6561.2609.32.72.72.8"
  - "Domestic5275.036.927.1601.01621.01196.73.17.75.5"
  - "T-Bills 66.60.50.3"
  - "Bonds5208.436.426.8"
  - "Contingent liabilities 399.0"
  - "Nominal GDP1946519465.5    20936.0   21735.0"

*Source: Fund staff.*

### 5. Debt consolidation across sectors:

### 5. Debt consolidation across sectors

### Coverage and data treatment
- DSA coverage: debt issued by central government, public bodies, and debt guaranteed by central government.  
- Authorities are expanding coverage and quality of public finance data, including expanding coverage to general government.  
- Under the 2014 GFSM methodology, staff considers that the NMIA securitization should be recorded as a debt accumulation instead of revenue; this would lower the primary surplus in FY2024/25 and raise the debt relative to the authorities’ definition.  
- Guidance notes and definitions preserved:  
  - CG = Central government; GG = General government; NFPS = Nonfinancial public sector; PS = Public sector.  
  - Stock of arrears could be used as a proxy in the absence of accrual data on other accounts payable.  
  - IPSGSs = Insurance, Pension, and Standardized Guarantee Schemes.  
  - Valuation definitions: Nominal value 5/, Face value 6/, Market value 7/.

### Public debt structure and market features
- Currency composition and expectations:  
  - The share of external debt is expected to decline over the medium-term as the authorities implement strategies and policies to develop the domestic debt market.  
  - Local currency debt is projected to decline with projected fiscal surpluses over the medium term and use of government deposits to pay down domestic debt.  
- Maturity and instrument profile: most planned issuances are for medium to long-term maturity.  
- Perimeter for presented debt indicators: includes direct central government debt, guaranteed debt and debt of public bodies guaranteed by the government, excluding the central bank.

### Baseline scenario: public debt trajectory and drivers (Table 3)
- Public debt (Percent of GDP, fiscal years):  
  - Actual 2023: 73.4  
  - 2024: 69.2  
  - 2025: 64.9  
  - 2026: 62.4  
  - 2027: 60.0  
  - 2028: 57.7  
  - 2029: 55.6  
  - 2030: 53.4  
  - 2031: 51.4  
  - 2032: 49.4  
  - 2033: 47.5  
  - 2034: 45.4
- Change in public debt (Percent of GDP): -3.6, -4.2, -4.3, -2.5, -2.4, -2.3, -2.2, -2.2, -2.0, -2.0, -1.9, -2.0
- Contribution of identified flows (Percent of GDP): -4.1, -3.6, -3.7, -2.3, -2.3, -2.3, -2.1, -2.1, -2.0, -2.0, -1.9, -2.0
- Primary deficit (Percent of GDP): -5.7, -5.9, -5.2, -4.4, -4.3, -4.2, -4.2, -3.9, -3.6, -3.5, -3.4, -3.4
- Noninterest revenues (Percent of GDP): 30.6, 33.3, 31.7, 30.1, 30.2, 30.2, 30.2, 30.5, 30.5, 30.5, 30.5, 30.5
- Noninterest expenditures (Percent of GDP): 24.8, 27.3, 26.6, 25.7, 25.9, 25.9, 26.0, 26.5, 26.8, 27.0, 27.1, 27.1
- Automatic debt dynamics (Percent of GDP): -0.8, 3.7, 1.5, 2.1, 2.0, 2.0, 2.0, 1.8, 1.7, 1.5, 1.4, 1.4
  - Real interest rate and relative inflation: 1.9, 3.1, 3.0, 3.0, 3.0, 2.9, 2.9, 2.6, 2.5, 2.3, 2.2, 2.1
  - Real interest rate: 0.1, 1.4, 1.4, 1.9, 1.9, 2.0, 2.1, 1.8, 1.8, 1.6, 1.5, 1.5
  - Relative inflation: 1.8, 1.7, 1.5, 1.1, 1.1, 0.9, 0.8, 0.8, 0.7, 0.7, 0.7, 0.6
  - Real growth rate: -1.4, 0.6, -1.5, -1.0, -1.0, -0.9, -0.9, -0.8, -0.8, -0.8, -0.8, -0.7
- Other identified flows / Other transactions (Percent of GDP): 2.4, -1.3, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0
- Contribution of residual (Percent of GDP): 0.4, -0.6, -0.6, -0.2, -0.1, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0
- Gross financing needs (Percent of GDP): 4.5, 9.7, 5.9, 5.6, 6.7, 8.8, 6.4, 6.0, 6.0, 6.4, 5.9, 6.7
  - Of which: debt service (Percent of GDP): 10.2, 15.7, 11.1, 10.0, 11.0, 13.0, 10.5, 10.0, 9.6, 9.9, 9.3, 10.1
- Local currency / Foreign currency (Percent of GDP, GFN split):  
  - Local currency: 3.1, 7.7, 5.5, 4.0, 5.1, 7.0, 6.5, 5.1, 6.1, 6.5, 5.8, 6.6  
  - Foreign currency: 7.2, 8.0, 5.6, 6.0, 5.9, 6.0, 4.0, 4.9, 3.5, 3.5, 3.4, 3.5
- Memo: Real GDP growth (percent): 1.8, -0.8, 2.2, 1.5, 1.5, 1.5, 1.5, 1.5, 1.5, 1.5, 1.5, 1.5  
  Inflation (GDP deflator; percent): 8.0, 6.1, 6.0, 5.0, 5.0, 4.7, 4.7, 4.7, 4.7, 4.7, 4.7, 4.7  
  Nominal GDP growth (percent): 9.9, 5.3, 8.3, 6.6, 6.6, 6.3, 6.3, 6.3, 6.3, 6.3, 6.3, 6.3  
  Effective interest rate (percent): 8.1, 8.2, 8.2, 8.1, 8.2, 8.3, 8.6, 8.3, 8.2, 8.1, 8.0, 8.0

- Commentary summary: Public debt is on track to meet the debt target of 60 percent of GDP by FY2027/28 (Fiscal Responsibility Law). Authorities have reduced near-term financing needs via liability management, buybacks, maturity extension (issuing 2045 bonds and a J$ denominated global bond to repay US$ global bonds). Vulnerabilities remain from global shocks, natural disasters, and contingent liabilities. Large GFN needs occur in FY2024/25 and FY2028/29.

### Realism of baseline assumptions
- Realism analysis finds no major concerns: past forecast errors show no systematic biases and projected debt reduction is within norms.  
- Most of the next five years' debt reduction is expected from elevated primary balance surpluses under the MTFF, consistent with the FRL.  
- Historical comparators: Jamaica implemented similar or bigger debt reductions during 2013-19 and 2021-2024, though current reductions are above the 75th percentile of the distribution.

### Medium-term risk analysis (Figure 4)
- Debt fanchart metrics and indices:  
  - Fanchart width (percent of GDP): 41.3, 0.6 (presented as module inputs).  
  - Debt fanchart index (DFI): 1.3 — Risk signal: Moderate.  
  - Average baseline GFN (percent of GDP): 7.2, 2.5 (module inputs).  
  - Initial banks' claims on general government (pct bank assets): 9.4, 3.1.  
  - Change in banks' claims in stress (pct bank assets): 3.5, 1.2.  
  - GFN financeability index (GFI): 6.7 — Risk signal: Low.  
  - Medium-term index: combined signal: 5/ — Final assessment: Prob. of missed crisis, 2024-2029, if stress not predicted: 9.1 pct.; Prob. of false alarms, 2024-2029, if stress predicted: 50.0 pct.
- Module conclusions: GFN Financeability Module and medium-term tools suggest low levels of risk; Debt Fanchart Module suggests moderate risk due to elevated fanchart width and history of high public debt volatility. In a natural disaster stress scenario, GFN needs would temporarily increase without reversing the debt downward trend over the medium term.

### Long-term risk analysis (Figure 5) and sectoral long-run scenarios
- Overall long-term risk: assessed to be moderate. Large amortization module shows gradual declines in GFN and debt relative to GDP under baseline and customized scenarios.  
- Custom scenario assumptions (presented side-by-side):  
  - Real GDP growth: 1.5% (medium-term extrapolation), 1.5% (2029), 2.0% (custom scenario)  
  - Primary Balance-to-GDP ratio: 4.2%, 3.6%, 1.0%  
  - Real depreciation: -2.4%, -2.4%, -2.4%  
  - Inflation (GDP deflator): 4.7%, 4.7%, 5.0%  
  - Commentary: the customized scenario assumes real GDP growth of 2 percent, a GDP deflator of 5 percent, and a primary balance surplus of 1 percent of GDP. This primary balance surplus is significantly lower than the average of 6.6 percent recorded over the last ten years.
- Demographics: pensions and health impacts:  
  - Pensions: under the current system, pension expenditures would lead to larger GFNs and a moderate rise in debt in the long run; parametric reforms and triennial actuarial reviews for the National Insurance Scheme and public employee pensions recommended to safeguard fiscal sustainability.  
  - Health: current health care expenditures would not pose significant sustainability concerns; a scenario of higher health-care cost growth (e.g., due to medical advances) could prevent sustained declines in GFN and public debt in the long run.
- Climate change: adaptation costs considered manageable; standardized scenario adds investments of 0.4 percent of GDP and customized scenario adds 0.2 percent of GDP over the long run without significantly impacting debt sustainability.

### External debt dynamics and stress tests (Table 4 and Figure 6)
- Baseline external debt (Percent of GDP, selected years): 2019: 82.6; 2020: 103.8; 2021: 92.6; 2022: 78.8; 2023: 75.7; 2024: 71.1; 2025: 64.7; 2026: 60.8; 2027: 57.9; 2028: 54.8; 2029: 51.2; debt-stabilizing non-interest current account: -1.7 (end value listed).  
- Change in external debt (Percent of GDP): -3.2, 21.2, -11.2, -13.9, -3.1, -4.6, -6.4, -3.9, -2.9, -3.1, -3.6 (2019–2029 series).  
- Identified external debt-creating flows (4+8+9): 0.0, 10.2, -12.4, -18.1, -11.2, -2.8, -4.0, -3.0, -2.3, -2.0, -2.2.  
- Current account deficit excluding interest (Percent of GDP): -0.7, -1.1, -1.8, -4.0, -5.5, -4.8, -3.2, -2.6, -1.9, -1.6, -1.9.  
- Automatic debt dynamics components (Percent of GDP): contribution from nominal interest rate: 2.6, 2.3, 2.4, 2.1, 2.4, 2.2, 1.9, 2.0, 2.1, 2.1, 2.0; contribution from real GDP growth: 0.1, 0.5, -7.6, -3.7, -1.3, 0.6, -1.5, -1.0, -0.9, -0.9, -0.8; contribution from price and exchange rate changes: 0.1, 2.3, -3.0, -10.7, -5.0, ..................  
- External debt-to-exports ratio (percent): 224.9, 521.9, 286.6, 201.2, 201.6, 204.4, 187.4, 179.1, 171.1, 162.3, 152.1.  
- Gross external financing need (in billions of US dollars): 2.6, 2.1, 2.7, 2.1, 2.1, 2.7, 2.7, 3.0, 3.2, 3.0, 2.6; in percent of GDP: 16.3, 15.1, 18.1, 12.0, 11.0, 10-Year, 10-Year, 13.3, 12.7, 13.4, 13.9, 12.7, 10.4 (table formatting retained as presented).
- Stress tests and bound tests: interest rate shock, current account shock, growth shock, combined shock, and 30 percent real depreciation scenarios are presented; shaded areas show actual data; individual shocks are permanent one-half standard deviation shocks. Example scenario outcomes (figures in boxes): baseline and scenario averages and ten-year historical averages are shown for key variables; Real Depreciation Shock (one-time real depreciation of 30 percent occurs in 2024) raises external debt notably in scenario charts.

### Key policy-relevant takeaways and recommended fiscal actions
- Maintain planned fiscal path under the MTFF and the Fiscal Responsibility Law to meet the 60 percent of GDP debt target by FY2027/28.  
- Continue liability management operations, buybacks, and maturity extension to reduce near-term financing needs and refinancing risks (examples already applied: issuance of 2045 bonds and a J$ denominated global bond to repay US$ global bonds).  
- Strengthen public finance data coverage and recording practices (e.g., record NMIA securitization as debt accumulation under GFSM 2014).  
- Monitor contingent liabilities from public bodies and natural disaster risks; maintain buffers given vulnerability to global shocks and natural disasters.  
- Undertake parametric reforms of public pension plans informed by triennial actuarial reviews; adjust National Insurance Scheme parameters to balance expanded coverage with fiscal sustainability.  
- Monitor health-care cost growth trends and climate adaptation investment needs; both are manageable under baseline but could introduce long-run pressures under adverse evolutions.

*Source: IMF staff estimates and projections (extracted from chapter "5. Debt consolidation across sectors").*

### Annex V. Capacity Development Strategy

### Annex V. Capacity Development Strategy

### Context
- At end-February 2025, Jamaica’s Precautionary and Liquidity Line (PLL) Arrangement expired. It was combined with the Resilience and Sustainability Facility arrangement (last review completed in August 2024) and followed on the heels of 6½ years of two successive financial arrangements.
- Fund capacity development (CD) during the program period was extensive and focused on:
  - AML/CFT supervisory framework;
  - revenue administration;
  - quantification of climate risks relevant to fiscal performance;
  - central bank management, operations and communication;
  - financial sector risks (including climate risks) and supervision;
  - Basel Framework II and III adoption;
  - cyber security and risk-based supervision in the financial sector;
  - comprehensive Crisis Management and Special Resolution Regime Framework for financial institutions;
  - improved statistics.
- Table 2 (in the source) documents CD missions since January 2018 and tentatively planned missions for 2025 to advance implementation of key reforms.

### Collaboration and Integration
- Fund’s CD engagement with Jamaica has been historically strong, supported by public buy-in and monitoring mechanisms such as the Economic Program Oversight Committee (EPOC) established in 2013.
- Constraints:
  - High staff turnover and understaffing at the Ministry of Finance and the Public Service (MOFPS) and the Statistical Agency of Jamaica (STATIN) pose risks to reform progress.
- The IMF team remains the main channel of engagement on CD, coordinating closely with CARTAC and CD providers at headquarters.
- Integration of CD in Fund surveillance:
  - CD delivery was fully aligned with the authorities’ reform objectives during the program period.
  - Going forward, objectives will be guided by surveillance priorities and ad-hoc requests by the authorities, with coordination of sequencing across reform workstreams.
- Collaboration with other partners:
  - Strong, especially on disaster risk management, climate-related reform measures under the RSF (coordinated with the IDB and World Bank), and social protection (World Bank lead).

### CD Priorities and Planned Support
- Main priority thrusts identified during the 2023-24 PLL/RSF engagements:
  - Establish a Twin Peaks supervisory regime.
  - Maintain a stable financial sector with improved risk-based supervision.
  - Continue improving the effectiveness of the AML/CFT regime after exit from FATF’s grey list in June 2024.
- AML/CFT
  - Objective: Continue to enhance the AML/CFT regulatory framework in line with FATF recommendations ahead of a fifth mutual evaluation round expected in 2026.
  - Recent developments:
    - Jamaica exited FATF’s grey list in June 2024 after completing an AML/CFT action plan addressing 13 actions from the 2017 Mutual Evaluation Report.
    - Authorities aim to secure favorable ratings for the remaining three (out of 40) technical recommendations by mid-2025, update their National Risk Assessment by end-2025, and prepare for an on-site mutual evaluation by mid-2026.
  - Planned CD:
    - LEG/CARTAC: Continue support to address deficiencies in AML/CFT supervision for banks and non-banks (cambios and remittance sector).
    - Assistance provided previously to strengthen legislative framework for microfinance sector supervision.
    - Support to develop and implement an AML/CFT risk model and risk-based offsite methodology; future work to include strengthening onsite supervisory tools.
    - World Bank and IDB assisted with the 2021 NRA; authorities are considering using the World Bank tool for the 2025 NRA update.
- Fiscal institutions and the fiscal rule
  - Objective: Maintain fiscal discipline and strengthen institutions to achieve fiscal rule targets; achieving the debt target under the fiscal rule will require robust fiscal institutions with strong analytical capacity.
  - Planned CD:
    - FAD: Public Financial Management — supported operationalization of the Fiscal Commission and preparation of related legislation approved in 2021; the Commission was operationalized in January 2025. A C-PIMA completed in 2023 and an Agile PEFA in June 2024; staff stand ready to assist with formulating the action plan to implement recommendations.
    - MCM/CARTAC: Debt Management — focus on capacity to develop effective investor relations by the debt management entity.
    - FAD: Revenue Administration — FAD TADAT TA in 2015, 2021 and 2022 assisted improvements in compliance, taxpayer tracking, timeliness in filing rates and accuracy in reporting tax arrears; FAD/CARTAC focus on customs procedures, core tax functions, and computation of cost of compliance.
- Monetary, foreign exchange frameworks, and financial sector oversight
  - Context: BOJ independence codified in the BOJ Law Act; modernization of operations, management, risk procedures and data quality critical for price stability mandate.
  - Planned CD:
    - MCM: Central bank operations and Monetary and Macroprudential Policy — support for tools on consolidated supervision, cyber and fintech risk analysis and control, crisis management capacity, pillar 3 of Basel III implementation, and follow-up on ICAP implementation. Note: BOJ adopted a CBDC in late 2022.
    - STA: Real sector — continued support to improve statistical capacity at STATIN and MOFPS to meet SDDS subscription requirements; supply and use tables (SUT) are significantly out of date and expenditure-based GDP estimates are only produced on an annual basis with significant lag; plans to expand PPI scope to industries like electricity, gas, services.
    - STA: Government Finance Statistics (GFS) — despite progress in compiling and disseminating some general government data on the NSDP, fiscal data suffer shortcomings identified in GFS TA reports, including central government budget recording and lack of adoption of GFSM 2001/2014 methodology; continued Fund support needed to improve GFS capacity and reporting practices.

### Other Reform Areas
- Areas that have received significant past CD but are expected to require less extensive support going forward:
  - Development of a tax administration reform strategy.
  - Strengthening international and natural resource taxation regimes.
- Independent Fiscal Commission (IFC)
  - A newly established IFC will receive CD from CARTAC, FAD, and ICD, evolving over time to match the IFC’s developing capacity and human resources.
  - The IFC’s remit: provide independent public opinion on the soundness and sustainability of Jamaica's fiscal position and policies; assess macroeconomic and fiscal forecasts, consistency of the budget with fiscal rules, and debt sustainability.

### Challenges and Mitigation Options
- CD priorities remain broadly unchanged, focusing on strengthening policy frameworks and institutions.
- Agreed challenges:
  - Delays in CD delivery at times due to lack of resources or prioritization.
  - High staff turnover exacerbates capacity constraints.
- Mitigation approach:
  - Continued coordination of IMF country team with CARTAC and other CD providers to sequence support across workstreams and respond to ad-hoc authority requests.

*Source: Annex V. Capacity Development Strategy (as provided in the supplied content).*

### introduction of

### 1jamea2025001-print-pdf - introduction of

### Reform progress: Climate and public financial management
- Objective: Strengthen climate resilience of public financial management and of the economy.
- TA/Training engagement:
  - FAD – applied C-PIMA to improve climate-related PIM processes and support green and sustainable economic growth; fiscal risk analysis from climate change.
- Achieved outcomes:
  - C-PIMA completed and informed setting of Reform Measures (RM) under the RSF.
  - Climate risks reflected in FY2024/25 Fiscal Risk Statement.
  - The RSF’s RMs successfully met improving climate resilience.
  - Methodology to quantify climate impact on fiscal risks disseminated and to be used going forward.
- Expected future outcomes:
  - Continued use of the methodology to quantify climate impact on fiscal risks.

### Reform progress: Public Financial Management (PFM)
- Objective: Improve operation of accounting systems and enhance fiscal institutions.
- TA/Training engagement:
  - CARTAC/STX: Cash forecasting, and management.
  - LTX: Analyzed government account balances held outside of the treasury account.
  - CARTAC: Agile PEFA Performance Assessment; Follow-up PEFA Action Plan; Sensitivity analysis and forecasting.
- Achieved outcomes:
  - Manuals for cash management and treasury developed.
  - Report on account balances led to closure of accounts.
  - Enhancements to chart of accounts developed and adopted.
  - Basic cashflow forecasting capacity developed.
  - Improved bank account monitoring and closure of unused and unnecessary accounts.
  - Improved management of government cash resources.
  - Increased capacity for better financial reporting.
  - Improved operations in the Accountant General Department.
- Expected future outcomes:
  - Improved policy-based fiscal strategy and budgeting, macroeconomic forecasting, and cash management.

### Reform progress: Public Bodies’ Reforms
- Objective: Strengthen fuel pricing mechanism.
- TA/Training engagement:
  - FAD: Desk review of fuel pricing reform.
- Achieved outcomes:
  - Report delivered outlining options for improving pricing mechanism.
  - Simplification of pricing formula and enhanced transparency via publication.
- Expected future outcomes:
  - Consolidation of simplified pricing formula and ongoing transparency measures.

### Reform progress: Government Financial Statistics (GFS)
- Objective: Report government financial statistics for the general government to meet SDDS standard.
- TA/Training engagement:
  - STA: Guidance and training provided on producing general government statistics.
- Achieved outcomes:
  - Systems and training in place to produce general government tables.
  - Inclusion of general government statistics in Fiscal Policy Paper.
- Expected future outcomes:
  - Include appropriations in aid in budgetary central government statistics.

### Reform progress: Public Debt Management
- Objective: Enhance the primary dealer system and functioning of the debt market.
- TA/Training engagement:
  - MCM: Identified areas of improvement in the primary dealer system.
  - MCM/CARTAC: Debt Management Investor relations.
- Achieved outcomes:
  - Initialized a review of the Primary Dealer Agreement.
  - Improved coordination amongst main participants in PD system with MOFPS playing a more active coordinating role.
- Expected future outcomes:
  - Effectively manage investor relations.

### Reform progress: Central Bank Operations and Financial Frameworks
- Objectives:
  - Modernize organizational structure in line with BOJ Act and enhance modelling and forecasting techniques.
  - Improve central bank risk management and security.
  - Twin Peaks Regulation Scoping and Roadmap.
  - Enhance financial stability analyses and assessments in the Bank of Jamaica (BOJ).
- TA/Training engagement:
  - MCM: Series of hands-on on- and off/site TA missions on FPAS (subject to progress achieved by the authorities on the operational side and capacity building).
  - COM: Enhanced communications structure and messaging.
  - MCM: Organizational and operational structure; CB risk management and cybersecurity; enhance financial stability analyses and assessments in the BOJ.
  - MCM/CARTAC: Twin Peaks Regulation Scoping and Roadmap.
  - CARTAC: CB communication workshop.
- Achieved outcomes:
  - Trained staff on the use of FPAS which now informs projections for monetary policy committee meetings.
  - Assisted with improving BOJ’s cybersecurity risk management framework in a practical demonstration of key cybersecurity approaches and processes.
  - Assisted the authorities in transitioning to a Twin-Peak Model.
  - Revamped organizational structure in line with new Monetary Policy Committee functions.
  - Continued use and customization of the FPAS model.
  - Enhanced BOJ cybersecurity risk management including setting up a core Incident Management Team to respond to critical incidents.
- Expected future outcomes:
  - Twin Peaks based supervision expected to be implemented in 2026.
  - Estimate sectoral credit risk models to enhance the forward-looking element of financial stability assessment.

### Reform progress: Bank and Financial Sector Supervision and Regulations
- Objectives:
  - Implementing Basel II and III Framework.
  - Improving supervisory oversight of financial conglomerates and other financial groups.
  - Improving Securities Market oversight.
- TA/Training engagement:
  - CARTAC: Series of missions on implementing Basel II -III Framework and risk-based consolidated supervision and a related workshop.
  - Basel Framework Pillar 2 Requirements Workshop.
  - Securities and Markets-Financial Supervision and Regulation.
  - Banking and Insurance Supervision and Regulation.
- Achieved outcomes:
  - Banks have adequate capital and liquidity that is in line with the Basel II/III standards to cover their risks and contribute to financial system stability.
  - Amended legal/regulatory and supervisory frameworks underpinning the implementation of risk-based consolidated supervision implemented.
  - Improved supervisory process for market intermediaries and collective investment scheme addresses key risks in the securities sector.
- Expected future outcomes:
  - Continued implementation and consolidation of Basel II/III frameworks and improved oversight of conglomerates and securities market participants.

### Reform progress: Financial Stability, Resolution Frameworks, and Macroprudential Policy
- Financial Stability
  - Objective: Preserving financial sector stability.
  - TA/Training engagement:
    - MCM/LEG: Design legislation for comprehensive Crisis Management and Special Resolution Regime Framework (subject to progress on earlier LEG/MCM recommendations).
    - MCM/STX: Work on contagion effects and risks around financial groups.
  - Achieved outcomes:
    - MCM/LEG: supported preparation of the Special Resolution Regime (SRR) law to strengthen the resolution of non-viable financial institutions while protecting financial stability and the public funds, in line with Fund staff recommendations.
    - Review and support drafting of cabinet submission and elements of legislation for the Resolution Authority.
    - SRR law submitted to parliament in June 2024.
  - Expected future outcomes:
    - Passing legislation and regulations for crisis management framework and special resolution regime.
- Macroprudential Policy
  - Objective: Develop Jamaica specific menu of macroprudential tools along with the requisite data and risk metric.
  - TA/Training engagement:
    - MCM: Upgrading macroprudential framework and designing capital flow safeguards and risk metric dashboards.
  - Achieved outcomes:
    - Planned macroprudential toolkit to be introduced.
  - Expected future outcomes:
    - Introduction and operationalization of the macroprudential toolkit.

### Reform progress: External and Monetary Statistics
- Balance of Payments (BOP) Statistics
  - Objective: Identifying data gaps contributing to large errors and omissions in the Balance of Payments statistics and compilation of direct investment data.
  - TA/Training engagement:
    - STA: Improving FDI position data.
    - CARTAC: BOP/IIP - Enhance Source Data; ESS Statistics.
  - Achieved outcomes:
    - Authorities reporting BOP statistics on BPM6.
    - Relaunch an annual benchmark DI survey for NFCs in 2024 to collect quarterly data.
    - Strengthen external debt statistics, increase efforts to identify intercompany lending.
    - Improve the response rate for NFCs, amend the Bank of Jamaica Act to include sanctions for nonresponse.
  - Expected future outcomes:
    - Strengthen BOP/IIP source data.
    - Incorporate information from the Tax Administration of Jamaica in BoP statistics.
    - Development an in-house Statistical Business Register.
    - Improve reporting of selected external debt components.
    - Collect data for the Coordinated Direct Investment Survey.
    - Identify Special Purpose Entities.
    - Adopt dissemination practices for selected datasets required for subscription to the SDDS.
- Monetary and Financial Statistics
  - Objective: Strengthening the compilation of depository corporations survey, expanding the coverage of monetary statistics to include other financial corporations, and compiling financial soundness indicators.
  - TA/Training engagement:
    - STA: Guidance and training provided on producing monetary statistics including for other financial corporations using the Standardized Reporting Forms (SRFs) in line with the methodology of the Monetary and Financial Statistics Compilation Guide and Manual.
  - Achieved outcomes:
    - Authorities submitting data on central bank and other depository corporations survey using SRF.
    - Authorities submitting data on other financial corporations using SRF.
  - Expected future outcomes:
    - Improve coverage of monetary statistics to include other financial corporations.
    - Production of a key set of Financial Soundness Indicators.
    - Data on other financial corporations submitted to STA and integrated in the monetary survey.

### Reform progress: National Accounts and Price Statistics
- National Accounts
  - Objective: Update the supply use tables and produce quarterly expenditure-based estimate of GDP.
  - TA/Training engagement:
    - STA: Guidance and training provided on producing general government statistics.
    - STX/STATCAN: Review of updated supply and use tables.
    - CARTAC support of improvements to the estimates of GDP.
  - Achieved outcomes:
    - Both updated SUT and quarterly estimates are nearly completed.
  - Expected future outcomes:
    - Publication of the quarterly expenditure-based estimates.
    - Publication of 2017 SUT.
    - Publish production and expenditure-based GDP after rebasing to 2015.
    - Publish the rebased annual data.
- Price Statistics
  - Objective: Reweight Consumer and Produced Price Indices.
  - TA/Training engagement:
    - CARTAC: Provided feedback on preliminary CPI weights.
  - Achieved outcomes:
    - New and old baskets being used to produce CPI estimates in parallel.
  - Expected future outcomes:
    - Publish CPI and PPI using new weights.
    - Improve coverage of the CPI by including additional cities, and PPI with additional industries including gas, electricity and services.

### IMF capacity development missions since 2018 (high-level themes)
- Areas of repeated TA/Training activity include:
  - AML/CFT regulatory framework and BOJ AML/CFT supervision.
  - Tax policy and tax administration reforms, including TADAT and discretionary tax waivers.
  - Customs administration reforms, modernization of IT systems, and workload assessments.
  - Public financial management: Treasury Single Account, cash forecasting, treasury and accounting manuals, Agile PEFA.
  - Macro/fiscal capacity building: FPP training, Macroframework Foundation Tool (MFT), Fiscal Sustainability Course.
  - Debt market development and primary dealer reforms; access to climate finance.
  - Financial sector supervision: Basel II/III implementation, consolidated supervision, liquidity and capital adequacy frameworks, macroprudential stress testing.
  - Bank of Jamaica modeling, forecasting, risk management, fintech and cybersecurity, and transition to Twin Peaks supervision.
  - Statistics: national accounts, CPI/PPI reweighting, BOP/IIP source data, monetary and financial statistics, SDDS subscription support.

### Integrated Policy Framework (IPF) — conceptual assessment
- Core points:
  - Under the IPF, monetary, financial and capital flow management policy frameworks are assessed jointly.
  - The IMF’s Integrated Surveillance Decision specifies that Foreign Exchange Interventions (FXI) are justified in response to disorderly market conditions (DMCs).
  - DMCs refer to situations which may be characterized, inter alia, by disruptive movements in a country’s domestic currency exchange rate (IMF, 2012).
  - The recently adopted IPF modernizes the IMF’s approach to policy responses to shocks and takes a more nuanced approach to DMCs.
  - The IPF provides foundations for advice on FXI motivated by recognition of frictions that gives a role to tools other than full exchange rate flexibility to respond to shocks.
- Three main frictions identified that may warrant FXI to complement the policy toolkit in cases of excessive exchange rate volatility:
  - Shallow or temporarily illiquid FX markets.
  - Unhedged currency exposures of balance sheets of entities holding the FX.
  - Inflation expectations de-anchoring due to high exchange rate pass-through.

*Source: 1jamea2025001-print-pdf - introduction of*

### 2. Guided by this joint assessment of policies, the IPF offers general principles and

### 2. Guided by this joint assessment of policies, the IPF offers general principles and specific use cases for FXI (IMF, 2023).

### General principles for FXI
- FXI should: (i) be undertaken only in the presence of well-identified frictions; (ii) be used only if shocks are large enough to pose significant risks to central bank price and financial stability objectives; (iii) not substitute for a warranted adjustment of macroeconomic (fiscal and monetary) policies; (iv) be integrated within the overall policy response, i.e., balanced against other policy levers such as MP, MPMs, and CFMs; (v) be accompanied by strong central bank governance and transparent communication; (vi) consider intertemporal trade-offs in spending and accumulating FX reserves; and (vii) consider multilateral effects.

### Policy Frameworks in Jamaica
- The BoJ formally adopted an inflation targeting regime in 2020 and Jamaica has established a macroprudential framework.
- The BOJ’s monetary policy objective is to keep inflation within a 4-6 percent target range using the policy rate as the main instrument to achieve it.
- The BOJ Act assigns to the BOJ the institutional responsibility for macroprudential oversight.
- Recent macroprudential and financial sector policy changes relevant for the FX market include:
  - establishing a Liquidity Coverage Ratio for significant currencies;
  - adjustments in Net Open Position (NOP) limits;
  - designating systemically important financial institutions;
  - regulating issuance of the FX denominated instruments for the domestic market;
  - establishing consolidated and risk-based supervision.
- FX NOP limits were introduced in 2018 and are subject to periodic reviews. For short positions, the FX NOP limit is 25 percent of regulatory capital in JMD, while limits are equivalent to 15 percent of regulatory capital in JMD for long positions. Absolute limits on NOP were removed in November 2023.

### Capital Flow Management (CFM) framework
- Resident individuals and non-financial firms have no restrictions on their holdings of FX or external investments; non-residents also do not have any significant restrictions on their acquisition of domestic assets—with the exception of FDI in the financial sector.
- Key CFM measures:
  - Surrender requirements: Authorized Dealers (ADs) and cambios must surrender 20 percent and 15 percent of their commercial FX purchases to the BOJ, respectively. Exporters are not subject to surrender requirements. (The regular surrender requirement is 5 percent for both ADs and cambios. There is also a surrender requirement under the public sector entity facility that amounts to 15 percent of ADs’ US dollar purchases from commercial clients and 10 percent of cambios’ daily foreign exchange purchases from commercial clients.)
  - Caps on FX assets holdings for institutional investors: FX assets cannot exceed 10 percent of total assets of pension funds and insurance companies, and 25 percent for securities dealers and collective investment schemes. The BOJ also defines permissible FX assets that institutional investors can acquire.
  - Local corporate bond issuance in FX needs approval from the BoJ and the FSC if the annual issuance exceeds US$20 million. Issuers are required to secure participation of investors typically involved in large corporate issuances with the requisite FX holdings.

### Jamaica’s Foreign Exchange Interventions (FXI)
- The BOJ participates in FX markets through different channels. BOJ’s FX purchases are predominantly FX purchases through surrenders from ADs and cambios.
- The BOJ purchases also used to include FX swaps. The BOJ FX swap arrangement—implemented in January 2020 to provide US$ liquidity to promote and encourage forward market transactions—is discontinued since March 2022, such that the BOJ no longer engages in new FX swap contracts.
  - In 2023, purchases from surrenders and FX swaps amounted to US$ 2.17 billion and US$ 9.99 million, respectively.
- BOJ’s FX sales/interventions primarily take place through auctions via the BOJ’s Foreign Exchange Intervention Trading Tool (B-FXITT) and direct sales to key entities typically through the public sector entity facility.
  - In 2023, BOJ’s FX sales through B-FXITT, FX swaps, and direct sales to key entities amounted to US$936.8 million, US$ 9.9 million, and US$ 10.0 million, respectively.
- The BOJ provides banking services to the Government of Jamaica, including for FX transactions.
- The BOJ and the Ministry of Finance and Public Service (MOFPS) are promoting use of FX hedging instruments; Petrojam uses “hybrid” FX forward instruments (weighted average selling rate on the date of settlement plus a fixed spread).
- FXIs through B-FXITT are frequent:
  - In 2023 the BOJ sold FX through B-FXITT on 35 days.
  - In 2024 the BOJ sold FX through B-FXITT on 38 days.
  - Sales through the public sector entity facility have essentially stopped since mid-2023.
- FX market purchases by the BOJ are predominantly surrender receipts.
- FX sales are positively correlated with FX market purchases, pointing to a tight relation between the CFM framework and FXI.

### Underlying frictions in FX markets
- FX market shallowness:
  - Daily FX spot market turnover as a share of GDP is less than ½ percent of GDP and has seen limited growth over the last decade.
  - The FX spot market turnover is smaller than in other emerging-market economies.
  - The set of available FX instruments is narrow in Jamaica.
  - The bid-ask spread for the spot exchange rate is large in Jamaica compared to regional peers.
  - As of August 31, 2024, there were 11 ADs—eight commercial banks, one merchant bank, two building societies—and 45 cambios licensed by the BOJ.
- Uncovered interest parity (UIP) premium:
  - The UIP premium is on average positive, its volatility is high, and there are spikes during global shocks.
  - The UIP premium for Jamaica is measured using the excess return of holding a Government of Jamaica 3-month treasury bill relative to a 3-month US treasury bill, after adjusting for the expected exchange rate change using the realized value for the bilateral JMD/USD exchange rate three-month ahead.
  - The UIP premium for holding Jamaica’s assets has declined over time but has remained positive over most of the last two decades.
  - The correlation of Jamaica’s UIP premium with the VIX and the price of oil amounts to 0.2, while the correlation with bond flows from the EPFR dataset is -0.13 when the UIP premium spikes (i.e., when the UIP premium is in the top quartile of its distribution).

### Financial stability and FX mismatches
- Sectoral balance sheets:
  - External liabilities of non-financial corporations (NFC) far exceed their external assets, mostly reflecting FDI inflows; tourism and mining are main drivers of FDI inflows.
  - FX sovereign debt is elevated, but risk is mitigated by public debt structure (predominantly long-term bonds and multilateral debt), the robustness of the fiscal framework, and rapid debt reduction.
  - The financial sector has a broadly balanced FX position, reflecting FX regulations, notably NOP limits.
  - The household sector is a net creditor in FX; banks typically do not offer FX loans to households, while households hold sizeable FX deposits.
- De-dollarization progress:
  - There has been a steady decrease in the dollarization of loans and deposits over the last decade. The decrease is more pronounced for loans than deposits.
  - Non-financial corporations have large FX borrowings, mainly led by the tourism sector, non-resident sector, and electricity, gas, and water sector.
  - Tourism and non-resident sectors are “naturally hedged” as their revenues are predominantly denominated in FX.

### Exchange rate pass-through and price stability risks
- The pass-through of exchange rate shocks to consumer prices is high in Jamaica:
  - The passthrough is estimated at 0.2, meaning a one percent depreciation in the bilateral JMD-USD exchange rate results in 0.2 percentage point increase in Jamaica’s headline consumer price inflation at a 12-month horizon.
  - At 0.2, the exchange passthrough in Jamaica is in the upper tercile of the distribution of exchange rate passthrough among 71 emerging markets.
- Asymmetric effects:
  - For the four-quarter-ahead projection horizon, a depreciation of the JMD/USD exchange rate does not significantly affect the lower tail of the predictive distribution of core inflation, but significantly affects the upper tail, consistent with stronger second-round effects when inflation is elevated.

### Policy considerations and recommendations
- Rationale for targeted FXI:
  - Frictions in FX markets, exposure to large global shocks, and exposure to natural disasters justify inclusion of targeted FXIs in the policy toolkit.
  - FXI is relevant to smooth destabilizing premia such as large increases in the UIP premia.
  - Financial stability risks from FX mismatches are limited but vulnerabilities could emerge after large shocks (e.g., natural disasters affecting FX-indebted sectors like tourism).
  - FXI could be considered when the cost of using monetary policy alone creates costly trade-offs for the BOJ’s objectives (e.g., when output and inflation move in opposite directions), and when the cost of using FXI instead is assessed as low.
  - Change in the monetary policy rate is the first line of defense given the risk of confusion regarding the nominal anchor associated with systematic use of FXI for price stability.
- Reform priorities to reduce reliance on FXI:
  - Gradual reforms in the CFM framework to develop FX markets, reduce need for FXI, and enhance the exchange rate’s role as a buffer to global shocks.
  - Reduced surrender requirements and associated sales would channel more FX inflows to private parties, deepening FX markets and increasing incentives for developing FX hedging instruments.
  - Continued review of other CFM restrictions—e.g., caps on FX assets for institutional investors or corporate bond issuance in FX—would be beneficial for FX market development.
- Strengthening FX hedging capacity:
  - Strengthened incentives and capacity to use FX derivatives can help manage volatility in commodity prices, reducing the need for FXI.
  - The BOJ substantially reduced its direct sales to public entities since mid-2023; Petrojam and other public entities have been purchasing needed FX in the market.
  - The “hybrid” forward instruments used by Petrojam could be replicated by others to better manage impacts from swings in commodity prices and scale back the BOJ’s footprint in the FX market.

*Source: 1jamea2025001-print-pdf*

### Annex VIII. Monetary Transmission Mechanism in Jamaica

### Annex VIII. Monetary Transmission Mechanism in Jamaica

### Monetary policy regime and impediments
- The Bank of Jamaica formally adopted an inflation targeting (IT) regime in 2020; the IT objective is to keep inflation within a 4-6 percent per annum range.
- The BOJ policy rate is the main instrument; other tools include open market operations, adjustments to reserve requirement ratios, and FXI. The BOJ operates an interest rate corridor and manages the foreign exchange market under a flexible exchange rate regime.
- The BOJ eased monetary conditions at the start of the pandemic and tightened in the second half of 2021; inflation has been within the BOJ’s target range since March 2024 except for a brief uptick in August 2024.
- Identified impediments to an effective MTM in Jamaica:
  - Limited competition in the banking sector; relationship lending.
  - Uneven or excess liquidity among banks.
  - High dollarization.
  - Information asymmetries.
  - Large weight of food and energy in the CPI basket: “Food & Non-alcoholic Beverages” weight 35.8 percent; “Housing, Water, Electricity, Gas & Other Fuels” weight 17.8 percent.
  - Remittances at 18 percent of GDP expand bank balance sheets and can sever the link between policy rate and banks’ funding cost.
  - Relationship lending leads to loan pricing less tied to current default risk and more dependent on historical pricing.

### Empirical approach and overall transmission findings
- Methodology:
  - A VAR model including GDP, consumer price index (CPI), credit to the private sector, and the BOJ policy rate is estimated with three lags at quarterly frequency.
  - Two sample periods: 1997 to 2014 (pre-IT) and 2015 to 2024 (IT period).
  - Monetary policy shock identified with a Cholesky decomposition placing the policy rate last in the VAR.
- Key findings from VAR impulse responses:
  - In 2015-24, a 100-basis points tightening shock to the policy rate is associated with a consumer price index lower by cumulative 1.2 percent ten quarters after the shock.
  - Following a 100-basis points tightening shock in 2015-24, the exchange rate appreciates by up to 2 percent at a 4-quarter horizon (lower exchange rate value indicates appreciation).
  - In 1997-2014, responses for exchange rate and consumer price level are typically not significantly different from zero and small in magnitude, indicating a weaker exchange rate channel and overall MTM in that period.
  - Results are robust to an alternative identification scheme placing the policy rate purged from inflation and GDP fluctuations first in the VAR.

### Passthrough from policy rate to interbank, lending, and deposit rates
- Data and methods:
  - Distributed lag regressions with six lags of the policy rate change and consumer price inflation; regressions extend from November 1994 to October 2024 (interbank passthrough from January 2010 to October 2024).
  - Rolling-window (20-year) regressions assess time variation.
- Lending-rate passthrough estimates (average, November 1994–October 2024):
  - Overall lending rate passthrough: 0.2.
  - Personal loans passthrough: 0.2.
  - Commercial loans passthrough: close to 0.3.
  - Mortgages passthrough: not significantly different from 0.
  - Installment loans passthrough: not significantly different from 0.
- Time variation and asymmetry:
  - Passthrough from policy rate to lending rates weakened markedly during the 2021-22 tightening episode; rolling-window estimates show transmission to lending rates fell to near 0.
  - Example from recent tightening: overall lending rate edged up by only 80 basis points despite a 650 basis points increase of the policy rate.
  - Lending rates respond more strongly to policy rate cuts than to policy rate hikes (asymmetric passthrough): for policy rate cuts, passthrough is typically positive and statistically significant for overall, commercial, and personal lending rates; not significant for policy rate hikes.
  - Interbank rate passthrough is equally strong for policy rate hikes and cuts.
- Deposit-rate passthrough:
  - Policy rate changes have a near-full passthrough to 1-month time deposits: a 100-basis points increase in the policy rate results in a 75 basis points increase in 1-month time deposit rate.
  - Passthrough is lower for time deposits with longer maturity and for demand and savings deposits.
  - Passthrough to overall deposits (weighted average across deposits) amounts to 0.3.
  - Asymmetric passthrough to deposit rates: reaction of deposit rates is stronger for policy rate cuts compared with policy rate hikes for many deposit categories; for time deposits up to one month the passthrough is equally strong for hikes and cuts.
  - Deposit composition as of 2024: demand deposits 27 percent, savings deposits 51 percent, time deposits 18 percent, with the remaining 4 percent corresponding to central government deposits.

### Interpretation and policy considerations
- Aggregate interpretation:
  - The MTM in Jamaica has strengthened over the last ten years compared with the two preceding decades, consistent with increased central bank credibility after adoption/transition to IT and a reduction in fiscal dominance.
  - The stronger transmission to consumer prices and the exchange rate likely reflects better anchoring of expectations and a large reduction in public debt that lessened crowding out of private credit.
  - The passthrough to lending and deposit rates remains less than desirable and was particularly weak during the 2021-22 tightening episode, reflecting persistent impediments.
- Policy recommendations to bolster MTM:
  - Deepen capital markets for government securities and corporate bonds to enhance transmission of policy rate changes to market rates.
  - De-dollarize the economy further; the improvement in MTM over the last decade coincided with a decrease in dollarization of loans and deposits (see Annex VII). Continued de-dollarization should strengthen the MTM.
  - Boost banking sector competition and mobility:
    - The government began issuing identification cards under the Integrated National Identification System to improve identity verification and enable digital transactions.
    - BOJ plans in 2024 for a centralized Know Your Customer (KYC) digital repository and the Account Portability Project to streamline account opening and facilitate bank mobility; these measures would encourage stronger competition among banks and amplify passthrough from the BOJ policy rate to lending and deposit rates.
- Additional context:
  - Nonfinancial corporate debt increased from 10 percent of GDP in 2015 to 32.9 percent of GDP in 2023.

*Source: Annex VIII. Monetary Transmission Mechanism in Jamaica, IMF staff calculations; Bank of Jamaica; Haver Analytics.*

### Annex IX. Operational Debt Anchor in Jamaica

### Annex IX. Operational Debt Anchor in Jamaica

### Overview
- Jamaica’s public debt-to-GDP ratio is projected to reach the 60 percent of GDP target by FY2027/28; the Fiscal Responsibility Law (FRL) mandates that ratio to remain at (or below) this target thereafter, effectively making it a debt limit.
- The analysis assesses whether adopting an operational debt anchor below 60 percent would improve the sustainability of the debt limit by providing a safety margin against severe shocks and reducing procyclicality in fiscal policy.
- The analysis recommends an operational medium-term debt anchor of 50 percent of GDP (or lower depending on emerging fiscal risks such as more severe and frequent natural disasters).

### Fiscal Framework in Jamaica
- Key elements of the FRL: (i) fiscal rules, (ii) a medium-term fiscal framework, and (iii) an independent fiscal institution.
- The FRL mandates achieving a debt-to-GDP ratio of 60 percent by FY2027/28 and becoming a limit thereafter.
- Escape clause and correction mechanisms:
  - The escape clause requires that the estimated impact of shocks must cause at least 1.5 percentage points decline in GDP to trigger it.
  - Article 48CA prescribes automatic adjustments: at least 0.75 percent of GDP stronger overall fiscal balance in the succeeding financial year compared with the overall fiscal balance needed to achieve the debt target.
- Institutional arrangements:
  - The authorities publish a medium-term fiscal framework with projections and budget ceilings by ministry.
  - The Independent Fiscal Commission came into effect in January 2025 to assess forecasts, rule consistency, and debt sustainability.

### Historical and Projected Debt Dynamics
- Historical public debt path:
  - Public debt-to-GDP fell from 144 percent in FY2012/13 to 73 percent in FY2023/24.
  - Public debt stood at 73 percent of GDP at the end of FY2023/24 (73.4 percent reported as the initial public debt level for projections).
- Projections:
  - Public debt is projected to meet the 60 percent of GDP debt target by FY2027/28 under the medium-term framework projections.

### Calibrating a Debt Anchor for Jamaica
- Methodology:
  - Calibration uses a stochastic debt sustainability analysis drawing macro paths from a multivariate normal distribution calibrated on Jamaica’s annual data from 2003 to 2023.
  - The debt anchor is calculated as an initial debt level such that debt remains below the 60 percent debt limit with a chosen probability over the medium term.
- Scenarios and assumptions:
  - Scenario 1: primary balance path broadly consistent with the February 2025 Fiscal Policy Paper, with a gradual reduction in the primary balance surplus from 5.9 percent of GDP in FY2024/25 to 3 ½ percent of GDP in FY2027/28.
  - Scenario 2: constant primary balance of 3 ½ percent of GDP throughout the projection horizon (from FY2024/25 to FY2028/2029), representing a steady-state scenario.
  - Both scenarios assume a 10 percent probability of breaching the debt limit and a 6-years projection horizon.
  - Simulations do not account for contingent liabilities or stock-flow adjustments.
- Calibration results:
  - Scenario 1:
    - Median debt-to-GDP projection reaches 60 percent in FY2027/28 given initial actual debt.
    - An initial debt level of 56 percent (operational debt anchor) would have ensured public debt does not breach the 60 percent debt limit with 90 percent probability under different shocks.
  - Scenario 2:
    - Under the looser constant primary balance, public debt would have less than 50 percent chance to reach 60 percent by FY2027/28 from the actual starting point.
    - An initial debt level of 51 percent (operational debt anchor) would have ensured public debt does not breach the 60 percent debt limit with 90 percent probability.
  - Recommendation: adopt an operational debt anchor of 50 percent of GDP (or lower depending on emerging fiscal risks), with a specific endorsement of the 51 percent anchor under the steady-state Scenario 2 as associated with the primary balance most likely to prevail over the medium term.

### Policy Considerations and Implementation
- Rationale:
  - An operational debt anchor below 60 percent provides a safety margin to accommodate shocks without breaching the FRL debt limit, reducing fiscal policy procyclicality and strengthening fiscal risk management.
  - Jamaica’s exposure to climate change—leading to more frequent and severe climate disasters—supports a prudent operational anchor.
- Legal and procedural implications:
  - Adoption of an operational debt anchor would require an amendment of the FRL.
  - Both the debt limit (60 percent) and the operational debt anchor should be described in the FRL in terms of their role in defining fiscal sustainability.
  - Suggested statutory language: fiscal policy will use an operational debt-to-GDP anchor of 50 percent (or lower depending on assessment of emerging fiscal risks such as more severe and frequent natural disasters) over the medium term to assure that the debt-to-GDP limit of 60 percent is not breached.
  - A transitional arrangement for public debt to converge to the operational debt anchor could be modeled after the current rule for the overall fiscal balance target.
  - When public debt reaches the operational debt-to-GDP anchor of 50 percent, the rule on the overall fiscal balance target should be reviewed; for example, implement a primary balance operational rule consistent with stabilizing public debt at 50 percent of GDP.

### Key Statistics and Exact Figures Cited
- Debt target/debt limit: 60 percent of GDP by FY2027/28.
- Recommended operational debt anchor: 50 percent of GDP (or lower depending on emerging fiscal risks).
- Historical debt: 144 percent in FY2012/13; 73 percent of GDP at end-FY2023/24; initial public debt level used in projections: 73.4 percent of GDP in FY2023/24.
- Primary balance assumptions:
  - Scenario 1: primary balance surplus declines from 5.9 percent of GDP in FY2024/25 to 3 ½ percent of GDP in FY2027/28.
  - Scenario 2: constant primary balance surplus of 3 ½ percent of GDP from FY2024/25 to FY2028/2029.
- Calibration parameters:
  - Probability of breaching the debt limit assumed at 10 percent.
  - Projection horizon: 6-years.
  - Scenario 1 operational anchor achieving 90 percent non-breach: initial debt level of 56 percent.
  - Scenario 2 operational anchor achieving 90 percent non-breach: initial debt level of 51 percent.
- Escape clause trigger: shocks must cause at least 1.5 percentage points decline in GDP.
- Correction mechanism: automatic adjustments of at least 0.75 percent of GDP stronger overall fiscal balance in the succeeding financial year.

*Source: Annex IX. Operational Debt Anchor in Jamaica (from the supplied IMF content unit).*

### References to Main Text

### 1jamea2025001-print-pdf - References to Main Text

### Supervision and Implementation Status
- Introduce formal arrangements for group-wide supervision of conglomerates which include securities dealers, both within the FSC and between the FSC and BoJ (FSC and BoJ)  
  - Time: NT  
  - Implementation status: The Bill to amend the FSC Act to enable the FSC to conduct group-wide supervision was tabled in Parliament in September 2023. The management meeting at the FSC facilitates communication and joint examination among the sectoral divisions.

### Insurance Sector (Recommendations 14–15)
- Enact binding regulations for asset-liability management and introduce regular stress tests for general insurers (Government, FSC)  
  - Time: MT  
  - Implementation status: The regulations requiring insurers to include ALM in their risk management programs were passed in December 2022. The regulations also required all insurance companies (life and general) to perform annual stress tests.
- Introduce a risk-based solvency regime, ideally at the time of adoption of IFRS 17 (Government, FSC)  
  - Time: NT  
  - Implementation status: The Minimum Capital Test (MCT) for general insurance companies was updated to reflect IFRS17. Amendment to the insurance regulations to implement the new MCT was completed in December 2022. Quantitative impact studies to update the test for life insurers were conducted. Life Insurance Capital Adequacy (LICAT) was finalized in 2023 and is being used to supervise life insurers. Amendments to the Insurance Act are being drafted.

### Macroprudential Policy and Framework (Recommendations 16–17)
- Develop a toolkit for macroprudential policy (BoJ)  
  - Time: MT  
  - Implementation status and details: BOJ intends to roll out a systemic risk buffer (SyRB) for Jamaican financial institutions (on a phased basis) in the next few years. The framework, which will be used to identify systemically important financial institutions, to which this buffer will apply, was published by the Bank on August 11, 2023. Proposals for Drafting Instructions for an omnibus legislative framework, integrating all capital requirements are to conclude in 2025. A related consultation paper is to be published by end-2025. The SyRB is a macroprudential policy tool intended to strengthen the capacity of the financial institutions (including the insurance sector) designated under the framework as systemically important to withstand losses during times of stress.
- Develop a communication strategy to convey financial stability assessments and link them to policy actions (BoJ)  
  - Time: MT  
  - Implementation status: Macroprudential policy decisions of the Financial Policy Committee (FPC) are published in the form of macroprudential policy statements on the Bank’s website. The Financial System Stability Committee (FSSC) provides recommendations to the FPC for review, decision and ultimately communication to the public, based on deliberations on macroprudential policy at its scheduled meetings.

### Crisis Preparedness, Recovery Planning, and Resolution (Recommendations 18–22)
- Introduce a special resolution regime (SRR) closely aligned with international best practice for resolving systemic financial institutions (Government)  
  - Time: NT  
  - Implementation status and details: As at October 2023, the Bank issued a consultation on ‘An Effective Special Resolution Regime for Financial Institutions in Jamaica’. The SRR informed policy proposals for legislation reform. The SRR was expected to be submitted to parliament by end-June 2024 as part of the 2023/24 PLL conditionality. The Financial Institutions Resolution and Winding-Up Act was tabled in the Senate on June 28, 2024. The Financial Institutions (Resolution and Winding Up) Act, 2024, allows for the regulator to intervene pre-emptively to ensure orderly resolution. Part XI addresses Cross-Border Co-operation and Treatment of Foreign Special Resolutions.
- Finalize an MoU between BoJ and the Jamaica Deposit Insurance Corporation (JDIC) to allow JDIC to better prepare for possible resolution action (BoJ, JDIC)  
  - Time: I  
  - Implementation status: This MOU was signed by Bank of Jamaica and the JDIC in 2024.
- Develop a contingency plan for a systemic crisis (All)  
  - Time: MT  
  - Implementation status and details: The SRR is to address contingency planning as part of the framework and is expected to be submitted to Parliament as part of the 2023/24 PLL conditionality. Under the FRC, a Technical Working Group reviewed and updated the National Financial Crisis Management Plan. Drafting of Playbooks for early intervention and resolution of DTIs, insurance companies, securities dealers, and life Insurers commenced in November 2022. The playbook for DTI sector has been completed. Crisis management playbooks for the Non-DTI sector, MOFPS and JDIC are being drafted with an expected submission date of Q1 2024. Once all Playbooks are completed, the FRC will commence simulation exercises at the agency and multi-agency level to test efficacy, slated for mid-2025 via a crisis simulation exercise. This is being addressed under the Financial Institutions (Resolution and Winding Up) Act, 2024 that was tabled in the Senate on June 28, 2024.
- Develop guidance for FIs on recovery plans and begin a pilot project to request such plans from the most significant institutions on a rolling basis (BoJ, FSC, JDIC)  
  - Time: I  
  - Implementation status: This is to be a requirement under the SRR framework. Guidance to the industry on the development of recovery plans will be the responsibility of the supervisor (FISD). This initiative is part of the Bank’s Strategic Objective for 2025, involving issuance of a consultation paper, with the expectation of full implementation by 2026.
- Develop strategy for funding of resolution, including whether to establish a resolution fund (All)  
  - Time: MT  
  - Implementation status: This forms part of the SRR framework which is expected to be submitted to Parliament as part of the 2023/24 PLL conditionality.

### Capital Market Development (Recommendation 23)
- Adopt a strategy for capital markets deepening, including developing the short end of the yield curve for benchmarking (Government)  
  - Time: NT  
  - Implementation status: BOJ led coordination, monitoring and implementation of a capital market deepening programme, in collaboration with the FSC and the JSE. Work advanced in focus areas to facilitate increased transparency and price discovery with the strengthening of trading microstructures. Initiatives to improve the ecosystem for issuing, listing, trading and rating of Jamaican corporate securities were implemented. Work advanced on the project to facilitate the GOJ domestic securities to be listed and traded on the JSE platform.

### Data Issues (Annex XI) — Data Adequacy Assessment and Developments (As of February 28, 2025)
- Overall assessment: The data provided to the Fund have some shortcomings but are broadly adequate for surveillance (overall rating: B). Improving coverage and granularity of national accounts, government finance statistics, monetary and financial statistics and consistency and timeliness of external sector statistics would enhance adequacy.
- Table 1: Jamaica: Data Adequacy Assessment Rating 1/B — Median Rating: B A B B A B B (across sectors listed as National Accounts, Prices, Government Finance Statistics, External Sector Statistics, Monetary and Financial Statistics, Inter-sectoral Consistency)
- Detailed questionnaire results highlights:
  - Coverage: B A B A B
  - Granularity: top/bottom cells reflect granularity assessments (Government Finance Statistics and Monetary and Financial Statistics have split cells)
  - Consistency: A B B
  - Frequency and Timeliness: A A A B A
- Changes since last Article IV consultation:
  - Completion in 2024 of structural benchmarks (SB) under the PLL (expired in February 2025): MOFPS disseminated General Government data (2019 up to 2023) on the NSDP, albeit with some remaining gaps in coverage and limited granularity; BOJ conducted the Non-Financial Corporations (NFC) survey to obtain data for Direct Investment Intercompany Lending positions for each quarter of 2023.
  - Authorities submitted provisional data on non-depository financial corporations and are refining them with guidance from STA.
  - Progress needed: compiling supply and use table, rebasing GDP, compiling industrial production index.
- Corrective actions and capacity development priorities:
  - Authorities reiterated commitment to SDDS adherence.
  - Implement modernization and restructuring framework from STA’s February 2024 mission with ongoing CD assistance; considering engaging a long-term expert.
  - BoJ engaging STA virtually to assure external sector data conform with SDDS.
  - BOJ and STA will engage to operationalize inclusion of FSIs in the IMF's FSI database; BOJ expressed interest in STA’s review of FSI compilation methodology.
  - STATIN and STA finalized a workplan for completing the 2015 Supply and Use Tables and rebasing GDP to 2015; continued development of an industrial production index.
- Use of data in Article IV consultations: Staff does not use any data and/or estimates in the staff report in lieu of official statistics.
- Other data gaps: Jamaica labor statistics are broadly adequate; adding private sector wages would enhance comprehensiveness. Climate change-related data, including experienced natural disasters, could be provided on a dedicated outlet.
- Data Standards Initiatives: Jamaica participates in the Enhanced General Data Dissemination System (e-GDDS) and has been publishing data on its National Summary Data Page since February 2017.

### Common Indicators Required for Surveillance (As of May 15, 2025)
- Table 2: Jamaica: Common Indicators Required for Surveillance — entries include Date of Latest Observation and Date Received for multiple series (examples in the source include Apr-25, May-25, Feb-25, Mar-25, Dec-24, Jan-25, 2023, Feb-2025, Apr-25, 14-May-25, 15-May-25, and multiple frequency/timeliness codes such as M2W, M, Q, A). The table in the source maps time series (International Reserve Assets and Reserve Liabilities of the Monetary Authorities; Exchange Rates; GDP/GNP; Reserve/Base Money; Broad Money; Central Bank Balance Sheet; Consolidated Balance Sheet of the Banking System; Interest Rates; Consumer Price Index; Revenue, Expenditure, Balance and Composition of Financing - General Government and Central Government; Stocks of Central Government and Central Government-Guaranteed Debt; External Current Account Balance; Exports and Imports of Goods and Services; Gross External Debt; International Investment Position).
- Frequency and timeliness coding definitions included in source (examples): (“D”) daily; (“W”) weekly; (“M”) monthly; (“Q”) quarterly; (“A”) annual; ("SA") semiannual; ("I") irregular; ("NA") not available or not applicable; ("NLT") not later than.
- Notes indicate encouraged/required frequencies under e-GDDS, SDDS and SDDS Plus and reference DSBB for summary of practices.

### RSF Reform Measures: Content and Impact (Annex XII) — First Review, RM1
- Objective: RSF-supported reforms consistent with Jamaica’s agenda to build resilience to climate change across public finance management, mitigation (renewable energy and reduced energy consumption), and financial sector resilience.
- RM1: The Ministry of Finance and Public Service (MOFPS) to adopt a National Natural Disaster Risk Financing (DRF) policy.
  - RM1 establishes foundation for a strategic approach to disaster risk financing and contributes to operationalization of Jamaica’s Public Financial Management Policy for Disaster Risk.
  - The policy adopts a comprehensive financing approach including an expanded set of insurance instruments to enable identification and selection of the most cost-effective disaster risk insurance.
  - Observations: Jamaica had availed a diverse set of financial coverage tools opportunistically rather than strategically. The NNDRFP was developed to create a strategic approach to DRM financing and was submitted to public consultation.
  - Policy focus areas:
    - i) budgeting for DRF – data processes and systems;
    - ii) building financial and disaster risk resilience;
    - iii) building institutional capacity.
  - First area includes strategies to improve budgeting and reporting of climate related expenses. Second area emphasizes a comprehensive financing approach including expanded insurance instruments. Third area focuses on improving competence in identifying and quantifying fiscal risks, including contingent liabilities related to natural disasters and strengthening capacity to evaluate alternative DRF instruments.
  - Implementation Plan: The policy is complemented by an Implementation Plan that identifies relevant parties and an operationalization/implementation schedule.
  - Inputs: Policy informed by the World Bank’s 2018 report "Advancing Disaster Risk Finance in Jamaica" and World Bank technical support during preparation.

*Source: 1jamea2025001-print-pdf - References to Main Text*

### 2. RM2: The Development Bank of Jamaica in consultation with the MOFPS to modify the

### 2. RM2: The Development Bank of Jamaica in consultation with the MOFPS to modify the 

### Integration of climate requirements into PPP Policy and SOP Manual
- Finding: Jamaica has made extensive use of public-private partnership (PPP) arrangements since 2011. PPPs are likely to remain an important vehicle for use and blending of private and public resources to advance development and to tackle climate related investment needs.
- Problem: The institutional PPP framework in Jamaica lacked a structure for allocation of climate risks between the government and PPP partners; PPP project appraisal, selection, procurement and contract management procedures did not integrate climate-related analysis based on a standardized methodology.
- Action taken:
  - The authorities amended the Policy and Institutional Framework for the Public-Private Partnership (PPP) policy Program to integrate climate-related analysis in PPP project appraisal, selection, procurement, and contract management procedures.
  - The authorities revised the PPP Standard Operating Procedure Manual to reflect these requirements.
- Purpose and expected impact:
  - The transparent and up-front allocation of liabilities will support proper quantification of liabilities and securing of the matching resources to control them.
  - The Manual operationalizes the Policy and defines process and procedure to integrate climate considerations into four PPP project phases: i) project identification; ii) business case; iii) transaction; and iv) contract management.
  - The Manual includes templates for each PPP project phase and is intended for government entities in charge of PPP—the Development Bank of Jamaica (DBJ)—and enterprises, financial institutions, and development organizations interested in PPP management.
- Technical assistance: Both the Policy and the Manual benefitted from the technical assistance of the Inter-American Development Bank (IDB).

### PPP Standard Operating Procedure Manual: Guidance by Project Phase (Box 1 summary)
- Project Identification:
  - Guidance to help DBJ/GoJ PPP teams ensure projects align with GoJ development goals (see: 2.1.1-2.1.3) and think through, at a high-level, how climate risks can affect the potential project.
- Business Case:
  - Guidance to embed climate resilience considerations into technical, financial, economic, environmental analyses to determine project viability and suitability as a PPP.
- Transaction:
  - Guidance to embed climate resilience into contract design, bidder qualification, tendering, and bid evaluation processes.
- Contract Management:
  - Decision support tools to track climate-related agreements set during Transaction Stage and manage unforeseen climate-related risks over the life of the PPP.
- Source cited: The PPP Standard Operating Procedure Manual, 2023.

---

### 3. RM8: The Ministry of Science, Energy and Technology (MSET) to submit to parliament the electric vehicles policy (EVP)

### Purpose and scope of the EVP
- Objective: Set functional standards and regulations for electric mobility; define energy sector guidelines for electric mobility accommodation; develop operational codes to promote adoption of electric vehicles; set guidelines for developing an electric mobility ecosystem.
- Context: Mass public transportation in Jamaica is underdeveloped with over-reliance on cars and taxis, leading to high per capita petrol consumption and high fuel import bill with related vulnerabilities (including inflationary pressures following the war in Ukraine).
- Potential outcomes over the next decade (as envisaged in the EVP, per source):
  - Share of electric vehicles rising to about 12 percent of total privately owned fleet.
  - Share of electric vehicles rising to about 16 percent of public transport.
  - Savings of 3 MTCO2eq.
- Estimated broader impacts: Positive economy-wide and socio-financial impacts due to investments in infrastructure, fuel imports reductions, development of renewables, and socio-financial (including health) savings from efficiency advantages in maintenance, emissions, and operations of electric fleet versus combustible engine-based fleet.
- Source for scenario: IDB Strategic Framework for Electric Mobility. Technical Cooperation Number JA-T1172 – Sustainable Transport and Renewable Energy-Powered Electric mobility April 2020, p.11, scenario 4.

### EVP building blocks
- Six building blocks of the EVP:
  - i) Establishment of different standards to enable electric mobility adoption including EV import standards requirements, EV registration procedures etc.
  - ii) Deployment of a public charging infrastructure network as a prerequisite to engage on this new technology transportation mode.
  - iii) Existence of a competitive EV infrastructure market.
  - iv) Proper management of batteries and other EV components second-life and recycling once EVs reach their end-of-life.
  - v) Promotion of specific training programs to develop EV knowledge among technical experts (mechanics, first response fleet professionals such as firefighters and police etc.).
  - vi) Social awareness among Jamaican population to incentivize EVs use through communication campaigns, test rides etc.
- Complementary measures: EVP policy complements fiscal incentive to stimulate purchase and promote expansion of EVs throughout the country.
- Origins and technical support:
  - EVP developed based on the Strategic Framework of Electric Mobility (SFEM) adopted by the government in March 2021 and developed with technical assistance of the IDB.
- Notes:
  - Establishment of efficient charging infrastructure expected to be undertaken by public and private stakeholders; currently, JPS (public electric utility) has been building charging stations.
  - Fiscal measures referenced: Customs Tariff (Revision) (Amendment) (No. 2), Resolution, 2022, and the Road Traffic (License Duties) Order, 2022.

---

### 4. RM9: MSET guidelines to reduce energy use in schools, hospitals, and public buildings

### Rationale and prior program impacts
- Objective: Promote energy efficiency and conservation to free public funds through lower government bills and reduced oil imports, creating fiscal space for productive spending and contributing to greenhouse gas emissions’ reduction.
- Historical impacts cited:
  - Energy Efficiency and Conservation Program implemented during 2012-2016 retrofitted public health, administrative and educational buildings, and is estimated to have saved some JD131.5 million (US$1 million).
  - Subsequent program over 2017-2021 estimated to have saved more than 0.6 million barrels of oil (equivalent to 8 percent of total crude volume imported in 2020) by equipping 30 public facilities with energy efficient systems.

### Contents and enforcement of the guidelines
- The guidelines:
  - Collate existing energy efficiency codes and standards to provide a centralized reference hub for practitioners across design, procurement, construction, operation, and maintenance stages.
  - Mandate use of appropriate expertise (engineers and architects) for application of codes and standards.
  - Set measures to evaluate outcomes of enhanced energy efficiency.
  - Define process to follow for new and existing structures as required by the RM.
  - Set specific energy efficiency requirements for hospitals and schools.
  - Establish procedures for monitoring, evaluation, measurement, and verification of implementation.

---

### 5. RM3: PIAB to define a methodology to conduct climate impact assessments and incorporate it in PIMS handbook

### Purpose and main features
- Objective: Contribute to a climate resilient Public Investment Management System (PIMS) by defining a methodology to conduct climate impact assessments at project appraisal (project proposal) stage and mandating its use via inclusion in the PIMS handbook.
- Problem addressed: Previous framework required screening for climate hazards using CCORAL and climate impact assessment at concept and proposal stages but lacked a uniform standard methodology.
- Methodology components:
  - (i) Identifies the climate risks for capital projects through the lifecycle of the project.
  - (ii) Identifies the climate risks’ data sources.
  - (iii) Defines processes and procedures to integrate climate risks analysis in projects’ economic and financial analysis.
- Application: Focuses on exposure of projects to damage from climate-related disasters and applies to projects proposed by ministries, departments, and agencies (MDAs), and public entities. Any project not meeting the climate impact criteria will not be included in the project pipeline or selected for financing.
- Influences and support: Informed by IMF’s 2023 Climate Public Investment Management Assessment (C-PIMA) and benefitted from technical assistance of the IDB.
- Availability:
  - Methodology available at: https://www.mof.gov.jm/wp-content/uploads/Climate-Risk-Assessment-Methodology-202312.pdf.
  - Included in the Public Investment Management System (PIMS) handbook.
  - MOFPS issued a circular mandating use of the methodology available at: https://www.mof.gov.jm/wp-content/uploads/Circular-34-Climate-Risk-Assessments-Incorporated-into-the-Appraisal-of- Public-Investment-Projects.pdf.

---

### 6. RM4: PIOJ to define and publish project selection criteria including climate change criteria

### Purpose and actions
- Objective: Require identification and publication of project selection criteria (applicable to any project) and dissemination of climate-related project selection criteria to enhance PIMS resilience.
- Problems addressed: Under previous framework, capital projects were not selected according to commonly applied and consistent project selection criteria, nor based on consistent climate-related selection criteria.
- Outputs:
  - PIOJ developed project selection criteria including:
    - (i) A description of the institutional framework in charge of project selection and a summary of the process.
    - (ii) A worksheet describing the selection criteria and weights applied to each criterion.
    - (iii) Detailed guidelines on application of the project selection criteria including a software used to apply them and guidance for its use.
  - Selection criteria account for projects’ vulnerability to climate hazards.
- Influences and support: RM4 was informed by the IMF’s 2023 C-PIMA and benefitted from technical support of the IDB.
- Availability: Project selection criteria available via Internet at: https://www.pioj.gov.jm/government-of-jamaica-pims-project-selection-criteria/.

---

### 7. RM6: MOFPS to submit amendment to FAA to establish a National Natural Disaster Reserve Fund (NDRF) subaccount and approve financial regulations

### Purpose and interaction with prior measures
- Objective: Complement RM1 (completed June 2023 with approval of the National Natural Disaster Risk Financing policy) by establishing an NDRF subaccount under the consolidated fund account and approving financial regulations for transparent administration and reporting.
- Function: NDRF will receive and disburse resources to alleviate impact of catastrophic natural disasters. Use of NDRF is triggered in response to catastrophic events exceeding the damage threshold defined in the amended Financial Administration and Audit Act (FAAA).
- Financial regulations: Approval assures transparent accounting of receipts and outgoings, facilitates audits, and should give confidence to international providers of financial assistance that funds will be used and accounted for transparently.
- Key elements of the financial regulations:
  - (i) Definition of the fund’s administrative body.
  - (ii) Identification of sources of financing and clear instructions for fund capitalization.
  - (iii) Definition of scope and types of interventions that trigger financing by the NDRF.
  - (iv) Timely fund disbursement procedures—in line with the 2019 MOFPS’s post-disaster budget execution guidelines—to ensure resources are made available in a timely and efficient manner.
  - (v) Mechanisms for tracking, accounting, and reporting of fund’s expenditures to ensure comprehensive and timely information is available to policymakers and the public.
- Accounting standard: International Public Sector Accounting Standard (IPSAS) are applied to the fund’s accounting.

---

### 8. RM10: Bank of Jamaica (BOJ) to publish climate risks assessment and define timeline to embed risks in supervision

### Purpose and components of the BOJ climate risks assessment
- Objective: Build capacity at the BOJ and the FSC to incorporate Climate-Related Financial Risks (CRFR) into risk-based supervision, risk monitoring, and evaluation practices.
- Outputs:
  - BOJ published a climate risks assessment report including a diagnostic of related climate and environmental risks detailing the current governance and regulatory regime in the Jamaican financial system.
  - Identified risks to be included in financial sector databases and embedded in supervisory activities according to a timeline proposed in the report.
- Report content:
  - (i) Assesses climate risks in Jamaica, distinguishing between physical and transition risks.
  - (ii) Investigates transmission channels of these risks into the financial system.
  - (iii) Analyzes transmission channels in major economic sectors including agriculture, distribution, mining and manufacturing, tourism and transportation and energy.
  - (iv) Provides a review of peer practices in managing climate-related financial risks and discusses the current climate readiness of Jamaica’s financial sector outlining national policies and regulatory framework in place.
  - (v) Provides recommendations for both the BOJ and the financial sector to enhance climate readiness.
- Timeline highlights (itemized in Table 16 of the BOJ report):
  - (i) Initiate enhanced data collection and reporting frameworks relating to climate-related financial risks (early 2024).
  - (ii) Adopt a monitoring framework that improves data collection and establishes reporting requirements for financial institutions (end-June 2024).
  - (iii) Conduct early climate stress testing exercises (end-2025).
  - (iv) BOJ to become a full member of the NGFS secretariat and arrange bilateral meetings with peer supervisors to discuss climate risk management, climate disclosures and climate stress testing (end-2024).
  - (v) Develop an own TCFD report (mid-2024).
- Technical support and status:
  - BOJ received support from the Agence Française de Développement (AFD) to develop the report.
  - The report is available via Internet at: https://e2gobqetsqs.exactdn.com/wp-content/uploads/2023/12/Climate-Risks-Report.pdf.
  - The above timeline has experienced some delays. A process to procure a consultant to assist with this work is currently in train and is expected to be finalized by end-2025.
- Note: Building capacity in data collection is the first step for conducting climate risk stress tests; identification and collection of climate data is complex and requires collaboration between climate scientists and financial sector experts.

*Source: Excerpt from IMF country report content provided in the supplied PDF chapter/section.*

### 9. RM5: The MOFPS to conduct and publish in the Fiscal Risk Statement quantitative

### 9. RM5: The MOFPS to conduct and publish in the Fiscal Risk Statement quantitative analysis of the fiscal risks generated by climate change

### RM5: Purpose and methodology
- RM5 contributes to a climate resilient fiscal framework by operationalizing a methodology to quantify climate impact on fiscal risks.
- Requirement to incorporate the methodology in the Fiscal Risk Statement (FRS) in The Policy Paper assures dissemination and mandatory use of the methodology at the most important moment in the budget preparation process.
- The methodology:
  - (i) identifies the climate risks through the lifecycle of the MTFF;
  - (ii) identifies the climate risks’ data sources; and
  - (iii) defines processes and procedures to integrate climate risks analysis in the FRS.
- Focus: past exposure to damage from climate-related disasters and calibration of these estimates for the forecasted FRS.

### Informing inputs and synergies
- RM5 was informed by the World Bank’s 2018 report “Advancing Disaster Risk Finance in Jamaica’’ quantifying the fiscal disaster losses.
- RM5 deepened synergies with World Bank efforts and was considered to contribute to the soundness of fiscal framework and the credibility of the budget.
- RM5 was also informed by the IMF’s Climate Public Investment Management Assessment (C-PIMA) and benefitted from technical support of IMF FAD delivered after C-PIMA completion (Fiscal Risks from Climate Change, Fisher L., October 2023).
- The C-PIMA was finalized in early 2023, identifying areas that would increase resilience of public investment to climate change.

---

### 10. RM7: The MOFPS to submit to parliament a bill to incentivize investment in renewables through fiscal measures

### RM7: Design and legislative status
- RM7 introduces personal income tax rebates to incentivize take up of solar panels for residential generation.
- Measure was developed in-house with analysis of experiences in Barbados, Trinidad and Tobago, and the United States.
- The bill was passed by parliament on July 9, 2024.
- The rebates shall apply to solar panels acquired and installed on or after January 1, 2023.

### Relation to existing incentives and additional reforms
- RM7 complements existing incentives: zero-rated VAT for inputs or raw materials supplied for the manufacture of solar and wind equipment, suspension of import duty for items on the priority list of renewable energy and energy efficiency until end-2025, favorable tariffs for imports of EVs, and net billing.
- In June the government tabled an amendment reducing the corporate income tax rate from 33 1  ⁄ 3 to 25 percent for independent power producers generating at least ¾ of energy from renewable sources.

### Expected impacts and fiscal cost
- RM7 was recognized as a high priority measure to accelerate renewable generation deployment.
- Expected impact on residential solar panel adoption and power generation depends on public take-up and is difficult to quantify.
- Revenue impact: authorities estimate potential revenue loss from the measure at approximately J$ 100 million.
- The volume of 2023 Net Billing applications was used to approximate demand for residential solar panels due to the income tax credit.

---

### 11. RM11: Adopt a monitoring framework for Climate Related Financial Risks stress testing and integration into supervision and macroprudential policy

### RM11: Scope and link to RM10
- RM11 complements RM10 completed in December 2023.
- Focus: adoption of a monitoring framework to improve data collection and establish reporting requirements for financial institutions to implement climate-related stress testing and for the BOJ to gradually integrate climate risks in supervision and macroprudential frameworks.
- Future activities:
  - increase collaboration between climate scientists and financial sector experts to operationalize climate related stress tests;
  - conduct climate related stress tests;
  - develop a monitoring framework to manage risks;
  - build capacity at the BOJ and the FSC for on-going assessment of climate-related risks.

### Timeline, data gaps, and outputs
- Data collection process to commence early in 2025 with development of new collection forms and expansion of existing forms expected by end-March 2025.
- Consultation and refinement through stakeholder engagement; framework expected finalized and related training rolled out by mid-2025.
- First cycle of data submission expected by end-September 2025; continual review and adjustment to be completed by end-2025.
- BOJ expects to launch a climate risk data dashboard on its website by end-March 2026.
- Identified data gaps: company specific financial and production data; sector-specific data accounting for varying vulnerabilities (e.g., energy sector transition risks vs agricultural sector physical risks); detailed locational and physical attribute data; emissions data in Jamaica.
- Climate risk reports will feed quantitatively and qualitatively into the Supervisory Review and Evaluation Process assessment.
- Results of climate stress tests will inform macroprudential policies, disclosure and reporting standards, and risk awareness in the financial sector.
- Process supports intersection of top-down climate stress tests with bottom-up tests by financial institutions for richer assessment of institutional preparedness.

### Implementation support, delays, and financing
- Timeline has experienced some delays. A consultant procurement process is in train and expected to be finalized by end-2025.
- Consultant tasks: finalize illustrative templates, populate a database, and carry out top-down stress tests.
- Work is supported by Agence Française de Développement (AFD) and the European Union under the Latin America and Caribbean Investment Facility (LACIF).
- BOJ received support from the AFD to develop RM11.
- RM11 recognized as high feasibility, high urgency, and informed by a 2022 project “Assessing Climate Related Risks in the Jamaican Financial System” launched with AFD assistance.

---

### 12. RM12: Establish an institutional framework for green-bond issuance and trading

### RM12: Objectives and background
- RM12 establishes an institutional framework for green-bond issuance and trading to mobilize private sector financing for climate adaptation and emission reduction projects, signal commitment to address climate change, and catalyze other financing.
- Guide for green bond issuance is available on the Jamaica Stock Exchange website.

### Financing and prior support
- RM12 recognized as a high feasibility measure building upon outcomes of a project to develop guidance for green bond listing, capacity building, and education of market players.
- Project supported with the 2019 Green Climate Fund (GCF) Readiness Grant (LAC-RS-003) of US$0.6 million (“Towards a comprehensive national adaptation planning process in Jamaica” PIOJ, 2020, p. 6).

---

### Annex XIII: Policy Frameworks, Economic Fundamentals and Capacity to Repay

### 1. Policy frameworks and macroeconomic management
- Jamaica’s Precautionary and Liquidity Line (PLL) and Resilience and Sustainability Trust (RSF) expired in February 2025 and September 2024, respectively.
- Institutional and policy reforms during the PLL:
  - Fiscal Responsibility Law (FRL);
  - independent fiscal commission (IFC) – came into effect on January 1, 2025;
  - adoption of an inflation targeting framework (ITF) – amendments to the Bank of Jamaica Act passed in December 2020 and became effective on April, 16 2021;
  - improvements in financial oversight – amendments to the Financial Services Commission (FSC) Act passed in November 2024 and new regulations for group-wide supervision;
  - Jamaica exited FATF’s increased monitoring (grey list) in June 2024;
  - Special Resolution Regime law submitted to parliament in June 2024.
- At end-September 2023, the central bank published a methodology to identify systemically important (bank and non-bank) financial institutions.
- Adoption of Basel III, risk-based supervision, crisis management and consolidated supervision advanced during the PLL.

### 2. Fiscal and external positions, buffers, and debt
- Gross international reserves have increased since program approval and averaged 95 percent of the ARA metric over the past three years, marginally below the 100 percent PLL threshold.
- Public debt declined from 142 percent of GDP in FY2009/10 to 73 percent of GDP in FY2023/24.
- Government deposits: around 4½ percent of GDP in FY2023/24; these deposits were subsequently drawn on to address hurricane-related damage in FY2024/25.
- Medium-term gross financing needs: about 7 percent of GDP on average.
- Insurance against natural disasters: about 5 percent of GDP secured.
- International reserves reached nearly US$ 5.7 billion at end-2024.
- Financial sector indicators: CAR at 14.5 percent and NPLs at 2.5 percent.

### 3. IMF Executive Board assessments
- IMF Executive Board consistently endorsed staff assessment of improvements in Jamaica’s policy frameworks and economic policies.
- Directors welcomed strong policy frameworks and institutional reforms and noted improvements in public debt, international reserves, and macroeconomic stability.
- Directors commended prudent fiscal policies, proactive debt management, and welcomed the independent Fiscal Commission.

### 4. Capacity to repay (CtR) and shock scenarios
- Jamaica’s capacity to repay the Fund is projected to be adequate both in the baseline and plausible shock scenarios.
- Overall credit outstanding to the Fund is well below nominal thresholds triggering a PFA, and only above the RST nominal PFA threshold by an amount equivalent to less than 5 percent of gross international reserves.
- By end-2026, the only credit outstanding to the Fund will be due to the RSF, remaining at 150 percent of quota until 2034 when the RSF principal payments will start.
- Until principal payments begin, charges and interest to the Fund will represent about 1 percent of Jamaica’s gross international reserves.
- Even after principal obligations begin, payments to the Fund would never rise above 2 percent of gross international reserves.
- RST repayments will end in 2044.

### Plausible shock scenarios considered
- Staff considered two plausible shocks:
  - (i) a shock where GDP is impacted by a relatively large hurricane (exceeding the impact of last year’s hurricane Beryl) causing a three percentage point decline compared to the baseline. In this scenario, the economy declines by 1.4 percent in 2026 (from 1.5 percent growth rate assumed under the baseline) and then recovers over the next three years; there would be spillover effects on inflation, and fiscal and external accounts.
  - (ii) a permanent shock in oil prices (a 20 percent rise in 2026 followed by a 10 percent increase in 2027). In the second scenario, the external current account turns from surplus of 0.6 percent of GDP to a deficit (scenario description continued in source).

*Source: IMF staff report chapter content as provided.*

### 1.5 percent of GDP  2026 and remains in deficit equal to about six time the baseline on average over

### Jamaica: Staff Report for the 2025 Article IV Consultation — Informational Annex

### Plausible Shock Scenarios and Macroeconomic Effects
- Purpose and design:
  - Plausible shocks designed to be severe but not sufficient to trigger financing needs leading to a request for a Fund arrangement (which would preclude initiation of a PFA).
  - Assumption: any financing needs due to the plausible shocks would be met through market access given Jamaica’s persisting sound policy frameworks and strong economic fundamentals.
  - Under the scenarios described, CtR indicators show mostly marginal deviations from baseline values, not suggesting a threat to the Capacity to Repay (CtR) to the Fund for indicators of total Fund credit outstanding and total debt service to the Fund.

- Key scenario summary (Table 1 data; percent unless noted):
  - Baseline (2024/25–2029/30):
    - GDP growth: -0.8, 2.2, 1.5, 1.5, 1.5, 1.5
    - Inflation (average): 5.1, 5.0, 5.0, 5.0, 5.0, 5.0
    - Fiscal balance (% of GDP): 0.3, 0.0, -0.2, 0.1, 0.4, 0.4
    - Current account balance (% of GDP): 2.6, 1.3, 0.6, -0.2, -0.4, -0.1
  - GDP growth shock:
    - GDP growth: -0.8, 2.2, -1.4, 3.0, 2.3, 1.8
    - Inflation (average): 5.1, 5.0, 5.8, 5.4, 4.7, 5.0
    - Fiscal balance (% of GDP): 0.3, 0.0, -2.3, -1.0, -0.2, 0.0
    - Current account balance (% of GDP): 2.6, 1.3, 0.0, -0.5, -0.7, -0.4
    - Narrative: includes a 1.2 percentage point loss in GDP growth in 2026 which returns to the baseline only in the third year after the shock, and an increase of the average inflation rate above the baseline.
  - Balance of payments shock:
    - GDP growth: -0.8, 2.2, 0.3, 1.2, 1.5, 1.5
    - Inflation (average): 5.1, 5.0, 6.3, 5.7, 4.4, 5.0
    - Fiscal balance (% of GDP): 0.3, 0.0, -0.9, -0.6, -0.3, 0.2
    - Current account balance (% of GDP): 2.6, 1.3, -1.5, -1.3, -1.4, -1.2

- Impact characterization:
  - Under the two shock scenarios, CtR indicators (total Fund credit outstanding and total debt service to the Fund) show mostly marginal deviations from baseline values.
  - Shocks result in a persistent deficit equal to about six time the baseline on average over the medium term in the described severe scenario (text: "remains in deficit equal to about six time the baseline on average over the medium term").

### Capacity to Repay (CtR) Indicators and Comparators
- Figures referenced:
  - Figure 1: CtR Indicators Compared to GRA-only Borrowing Countries, EFF
    - Panels: A. Total Fund Credit Outstanding; B. Total Debt Service to the Fund; C. Largest Peaks (for Fund Credit Outstanding as percent of GDP; for Total Debt Service to the Fund as percent of exports of goods and services).
  - Figure 2: Jamaica: Capacity to Repay Indicators
    - Panels: A. Total Fund Credit Outstanding; B. Total Debt Service to the Fund.
- Notes and data definitions (preserved exactly):
  - T = date of GRA arrangement approval.
  - Red lines/bars indicate the CtR indicator for the arrangement of interest.
  - The median, interquartile range, and comparator bars reflect all RFIs and UCT arrangements approved under the GRA (excluding blending arrangements) between 2008 and February 23, 2024.
  - Countries in the control group with multiple RFIs and/or GRA arrangements are entered as separate events in the database.
  - Comparator series is for GRA arrangements only and runs up to T+5.
  - Total Debt Service to the Fund consists of GRA, RST and SDR-related obligations. Reflects prospective payments, including for the current year.
  - All charts use data at the time of program approval with the exception of the chart on the right-hand side of section C, which uses ex-post data due to data limitations. The peak value for LBR (2011) is 81.7% and is not fully visible in the chart.

### Fund Relations, Quotas, and Financial Arrangements (as of dates in document)
- Membership and obligations:
  - Joined: February 21, 1963, Article VIII.
  - Quota (General Resources Account): 382.90 SDR Million = 100.00 percent of quota.
  - IMF's Holdings of Currency (Holdings Rate): 434.14 SDR Million = 113.38 percent of quota.
  - Reserve tranche position: 27.35 SDR Million = 7.14 percent.
  - SDR Department net cumulative allocation: 628.64 SDR Million = 100.00 percent.
  - SDR holdings: 179.07 SDR Million = 28.48 percent.
- Outstanding purchases and loans (SDR Million; percent of quota where given):
  - Emergency Assistance: 47.86 = 12.50
  - RSF Arrangements: 574.35 = 150.00
  - Extended Arrangements: 30.68 = 8.01
- Latest financial arrangements (table entries preserved):
  - PLL: Date of Arrangement Mar 01, 2023; Expiration Date Feb 28, 2025; Amount Approved (SDR Million) 727.51; Amount Drawn (SDR Million) 0.0
  - RSF: Date of Arrangement Mar 01, 2023; Expiration Date Sep 04, 2025; Amount Approved (SDR Million) 574.35; Amount Drawn (SDR Million) 574.35
  - Stand-By: Date of Arrangement Nov 11, 2016; Expiration Date Nov 10, 2019; Amount Approved (SDR Million) 1,195.30; Amount Drawn (SDR Million) 0.00
- Outright loans:
  - RFI: Date of Arrangement May 15, 2020; Date Drawn/Expired May 19, 2020; Amount Approved (SDR Million) 382.90; Amount Drawn (SDR Million) 382.90
- Jamaica: Overdue Obligations and Projected Payments to Fund (SDR Million; Based on Existing Use of Resources and Present Holdings of SDRs):
  - Forthcoming Principal 2025–2029 (entries partial in source): 69.10 9.44 (format preserved as presented)
  - Charges/Interest: 28.66 36.40 36.16 36.17 36.14
  - Total: 97.76 45.84 36.16 36.17 36.14
  - Note: Jamaica does not have overdue obligations to the Fund.

- Exchange rate arrangements and recent exchange rate:
  - De-facto exchange rate regime: classified as a ‘crawl-like arrangement’.
  - On March 31, 2025, the Jamaican dollar was trading at around J $157.67 to the U.S. dollar.
  - Jamaica has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF’s Articles of Agreement.
  - Jamaica maintains an exchange rate system free of restrictions on the making of payment and transfers for current international transactions and multiple currency practices.

- Article IV Consultation:
  - The last Article IV consultation was completed by the Executive Board in February 2024.
  - Jamaica is on the standard 12-month consultation cycle.

### Financial Sector Assessment, Safeguards, and Regulatory Developments
- FSAP and regulatory reforms:
  - FSAP Stability Module mission visited Jamaica in April and June 2018.
  - BOJ implementing FSAP recommendations: roll out of Basel III Capital Adequacy Framework; operationalization of risk-based supervision on a solo and consolidated basis; submission of a Special Resolution Regime (SRR) law to parliament in June 2024.
  - 2020 approval of an amended BOJ Act strengthened autonomy and governance arrangements of the BoJ.
  - Mid-2021: BOJ initiated licensing and consolidated supervision of financial holding companies; FSC implemented risk-based supervision of non-deposit taking institutions in 2021.
  - Current regulatory provisions and valuation accounting standards for deposit-taking institutions: IFRS 9.
  - IFRS 17 adopted in 2023.
  - Basel III adoption: completed Pilar I and moved to Pilar II in 2023; Pilar III will commence thereafter.
  - BOJ monitoring credit unions ahead of including them under supervisory remit once relevant legislation adopted.
- Safeguards assessment:
  - A safeguards assessment of the BoJ completed in April 2023 found a relatively strong safeguards framework.
  - The assessment made recommendations to further anchor BoJ autonomy in legislation and enhance external and internal audit practices.
  - Since then, progress made: strengthened internal audit under the Audit and Risk Committee; enhanced external audit mechanism through auditor rotation requirement; progress on legal amendments ahead of transition to a "twin peaks" supervisory regime.
- Anti–money laundering / countering the financing of terrorism (AML/CFT):
  - Implementation of action plan agreed with FATF resulted in removal from the “grey list” in June 2024.

### Technical Assistance Provided and CARTAC Activities (selected items)
- FAD technical assistance highlights (dates preserved as in source):
  - October 30–November 19, 2023: STX - Strengthened core tax administration functions - Revenue Accounts
  - October 18–31, 2023: HQ Mission - Fiscal Risks Analysis from Climate Change
  - April 17–21, 2023: STX - Strengthened core tax administration functions - Arrears Management
  - May 20–November 18, 2022: STX - Corporate Priorities - Business Impact Analysis
  - December 20, 2022–April 19, 2023: LTX Desk Related Work
  - (Additional FAD missions listed; full chronology maintained in the source.)
- LEG technical assistance highlights:
  - August 29–September 4, 2024: Support BOJ’s AML/CFT risk-based supervisory regime
  - August 14–18, 2023: AML/CFT risk model and methodology for offsite activities
  - March 15–19, 2021: Strengthening Risk-Based Supervision BOJ
  - (Additional LEG missions listed.)
- MCM technical assistance highlights:
  - February 12-16, 2024: Cyber Risk Regulation, Supervision and Resilience
  - October 3, 2023: IMF-CEMLA-ASBA Workshop on Cyber Resilience
  - September 12-16, 2022: Central Bank Risk Management And Cybersecurity
  - (Additional MCM missions listed.)
- STA technical assistance highlights:
  - February 8-15, 2024: Diagnostic of STATIN Operations and Modernization Plan
  - November 13-17, 2023: Government Finance Statistics - IMF01
  - July 24-28, 2023: TA - PIE - Improving GDP
  - (Additional STA missions listed.)
- CARTAC Technical Assistance to Jamaica in FY2020–FY2025 (selected items and dates preserved):
  - Financial Sector Supervision: Basel Core Principles for Effective Supervision Workshop 4/21/25–4/25/25
  - Basel Framework Pillar 2 Requirements Workshop 7/22/24–7/26/24
  - Twin Peaks Regulation Scoping and Roadmap 5/15/23–5/19/23
  - Workshop: Basel II/III Framework 10/12/21–10/21/21
  - Dynamic Stress Test for Banks 10/02/21–10/08/21
  - Government Debt Market (Mission) 10/04/21–10/15/21
  - Macroeconomic Program work and MTF development missions with dates preserved in source.

### Relations with Other International Financial Institutions
- As of May 30, 2025, Jamaica collaborated with The World Bank Group, Inter-American Development Bank, and Caribbean Development Bank.
- Hyperlinks to further information are provided in the source document for each institution.

*Source: Jamaica — Staff Report for the 2025 Article IV Consultation — Informational Annex (prepared by Western Hemisphere Department); data and text as presented in the supplied content.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1jamea2025001-print-pdf.pdf_