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### Recent developments and outlook
- Over the last decade Jamaica reduced public debt, inflation, and external deficits and strengthened institutions (fiscal responsibility legislation, improved budget process and public financial management, creation of a fiscal council, inflation targeting framework), and enhanced disaster preparedness under the RSF arrangement.
- Prior to Hurricane Melissa:
  - Growth was rebounding and projected to exceed 2 percent in FY2025/26.
  - Headline inflation was 2.9 percent in October.
  - Public debt was on track to meet the Fiscal Responsibility Law target of 60 percent of GDP by end-FY2025/26.
  - Sovereign spreads fell below 100 bps in October.
- Hurricane Melissa (made landfall October 28 as a Category 5 hurricane with wind speeds reaching up to 185 mph) caused:
  - 45 confirmed dead, at least 90,000 displaced.
  - Direct physical damages estimated at US$8.8 billion (41 percent of GDP) per the GRADE assessment.
  - Damages concentrated in western and central parishes (90 percent of total); St. Elizabeth parish registered US$2.3 billion in losses.
  - Damage composition: residential buildings and contents US$3.7 billion (41 percent), infrastructure US$2.9 billion (33 percent), non-residential buildings US$1.8 billion (20 percent), agriculture US$0.4 billion (4 percent).
- Sectoral impacts and recovery status:
  - Tourism (~one-third of the economy) and agriculture (8 percent of GDP) were severely affected.
  - By early December, 78 percent of the electricity grid and 80 percent of telecommunication networks had been restored; 95 percent of roadways were open.
- Output and external outlook:
  - Output projected to contract by 4.3 percent in FY2025/26.
  - Output expected to return to pre-hurricane level only in 2028.
  - Current account projected changes: surplus of 1.0 percent to deficit of 2.0 percent of GDP in FY2025/26; surplus of 0.1 percent to deficit of 5.3 percent of GDP in FY2026/27.
  - Urgent external financing need of over USD 1.4 billion (about 6 ½ percent of GDP).
  - Reserves expected to edge up to US$5.9 billion, about 89 percent of the Fund’s reserve adequacy metric in FY2026/27.

### Estimated damages, disaster financing, and reconstruction arrangements
- Damages and private coverage:
  - GRADE estimate: direct physical damages US$8.8 billion (41 percent of GDP).
  - Private sector insurance coverage estimated between US$1 bn and US$4.2 bn.
  - GRADE assessment will inform a detailed sectoral evaluation scheduled for release in early 2026.
- Disaster risk financing framework (layers and amounts as percent of GDP):
  - Contingency Fund and National Natural Disaster Reserve Fund: 0.2 percent of GDP.
  - World Bank catastrophe bond payout: 0.7 percent of GDP (recorded as non-tax revenue in FY2025/26).
  - Caribbean Catastrophe Risk Insurance Facility payments: 0.4 percent of GDP (recorded as non-tax revenue in FY2025/26).
  - Catastrophe Deferred Drawdown Option with the World Bank: up to 0.4 percent of GDP (adds to public debt).
  - Contingent Credit Facility with the IDB: up to 1.4 percent of GDP (adds to public debt).
  - Total inflows from these instruments and government contingency resources: US$625 million (as noted in the Letter of Intent).
- Institutional arrangements for reconstruction:
  - National Reconstruction and Resilience Authority (NARA) established (time-bound) to lead, coordinate, fast-track, and oversee rebuilding; supported by World Bank technical assistance.
  - Focus on climate-resilient infrastructure, especially road network reconstruction.
  - All public sector purchases subject to the Public Procurement Act of 2015 principles.
  - Parliamentary oversight committee and real-time audit by the Auditor General’s department.
  - Authorities intend to strengthen procurement and contract award practices; public investment expected to rise about 80 percent in nominal terms in FY2026/27 and thereafter grow broadly in line with nominal GDP.

### Authorities’ fiscal and emergency response (Third Supplementary Budget and measures)
- Fiscal rule suspended for FY2025/26 and FY2026/27 under Article 48C of the Fiscal Responsibility Law (conditions and verification required).
- Third Supplementary Budget (announced early December 2025) increases spending and loans by around 3 percent of GDP for FY2025/26, including:
  - Hurricane Melissa response and relief package: 0.8 percent of GDP (road repairs, procurement of containerized homes, allocation for goods and services for affected people, National Cleanup program, temporary support to displaced tourism workers).
  - Higher spending for the Office of the Prime Minister: 0.5 percent of GDP.
  - Higher spending for the Ministry of Education, Skills, Youth and Information: 0.5 percent of GDP for school repairs and university subsidies.
  - Higher spending for the Ministry of Health and Wellness: 0.4 percent of GDP for health services and hospital reconstruction/modernization.
  - A loan to the private electric utility company: 0.7 percent of GDP to reconstruct the electric grid.
  - Permanent shift of the due date of corporate income tax payments lowering revenues in FY2025/26 by 1.1 percent of GDP.
  - Increase in non-tax revenues from World Bank catastrophe bond and CCRIF payouts: 1.1 percent of GDP.

### Monetary, FX, and financial-sector responses
- Monetary policy and inflation:
  - Hurricane caused a significant negative supply shock, raising near-term food prices.
  - Headline and core inflation in October were 2.9 percent and 3.2 percent respectively; headline rose to 4.4 percent in November; core increased to 3.4 percent.
  - BOJ intends to manage the monetary policy rate to ensure inflation expectations are anchored and to contain second-round supply-shock effects.
  - Core inflation measure excludes food, fuel, alcohol and tobacco, and transportation components.
- Foreign exchange intervention:
  - BOJ used FX intervention to smooth exchange rate adjustment given shallow FX markets and the severe shock.
  - FX sales were US$210 million in November.
  - BOJ initiated direct FX sales to selected energy-sector entities on an emergency basis and announced future FX sales via competitive auction.
  - Staff recommendation: limit FX intervention to circumstances in the Integrated Policy Framework; direct FX sales to energy sector entities should be time-bound, exceptional, and market-consistent.
- Credit relief and financial sector measures:
  - National Housing Trust (NHT) measures: six-month mortgage moratorium for about 20,000 households in most severely hit areas; home improvement loans and grants; insurance claim eligibility; means-tested, subsidized mortgage rates for eligible NHT contributors.
  - Banks: announced loan moratoriums on a case-by-case basis; continue to display strong liquidity and high capitalization.
  - BOJ: maintain adequate system liquidity, keep standing facilities fully available, and issued supervisory guidance for temporary voluntary customer relief arrangements.

### Debt dynamics, Fund engagement, and RFI request
- Public debt trajectory:
  - Public debt declined from 101.3 percent of GDP in FY2020/21 to 62.4 percent of GDP in FY2024/25.
  - Debt-to-GDP ratio expected to increase to 68.6 percent of GDP in FY2025/26 due to the hurricane, reconstruction spending, and fiscal-rule suspension.
- Financing and medium-term outlook:
  - Additional financing needs in FY2025/26 and FY2026/27 expected to be met by disaster financing instruments, the RFI, and a large drawdown in government deposits (anticipated at about 3 percent of GDP in FY2026/27).
  - Primary balance projected to be about 2 percent of GDP lower toward the end of the medium-term projection horizon relative to the 2025 Article IV consultation.
  - Authorities committed to resuming downward path for debt-to-GDP once the hurricane shock recedes.
- IMF engagement and RFI specifics:
  - Damage estimates meet the RFI large natural disaster window (damage estimated at 41 percent of GDP).
  - Requested RFI access: 80 percent of quota (306.32 million or about US$415 million).
  - Staff view: RFI appropriate; access within GRA limits; Jamaica’s debt remains sustainable and capacity to repay Fund is adequate.
  - Jamaica had total credit outstanding to the Fund of SDR591 million as of end-November 2025 (154.31 percent of quota), comprising RST loans (150 percent of quota) and EFF purchases (4.31 percent of quota).
  - Debt outstanding to the IMF would reach around 230 percent of quota (80 percent of quota excluding the RSF) or 5.3 percent of GDP in 2026.
  - Debt service to the Fund would peak in 2030 at SDR191 million (SDR170 million excluding the RSF) corresponding to 1 percent of GDP, 3.1 percent of exports or 4.3 percent of gross international reserves.

### Macro projections and key numerical indicators (selected figures preserved)
- Real GDP (fiscal-year series): 2021/22: 9.6; 2022/23: 5.5; 2023/24: 1.9; 2024/25: -0.5; 2025/26: -4.3; 2026/27: 0.8; 2027/28: 3.0; 2028/29: 2.0; 2029/30: 1.5; 2030/31: 1.5.
- Nominal GDP (fiscal-year series, J$ billions): 2021/22: 20.1; 2022/23: 19.2; 2023/24: 10.4; 2024/25: 4.8; 2025/26: 0.6; 2026/27: 8.3; 2027/28: 7.9; 2028/29: 6.8; 2029/30: 6.3; 2030/31: 6.3.
- Consumer price index (end of period, fiscal-year): 2021/22: 11.3; 2022/23: 6.2; 2023/24: 5.6; 2024/25: 5.0; 2025/26: 9.5; 2026/27–2030/31: 5.0 (each year).
- Fiscal-year fiscal indicators (percent of GDP):
  - Budgetary revenue: 2024/25: 30.3; 2025/26: 30.3; 2026/27–2030/31 projections: 28.2, 28.2, 28.1, 28.2, 28.2.
  - Budgetary expenditure: 2024/25: 30.0; 2025/26: 33.8; 2026/27–2030/31: 33.0, 32.1, 31.0, 31.0, 30.9.
  - Central government primary balance: 2024/25: 5.4 percent; 2025/26: 1.7 percent; 2026/27–2030/31: 0.2, 1.0, 1.7, 1.7, 1.7.
  - Public debt (FRL definition): 2024/25: 62.4 percent of GDP; 2025/26: 68.6 percent; 2026/27–2030/31: 65.9, 65.9, 65.6, 65.5, 65.2.
- External sector (selected USD figures and percent of GDP):
  - Current account balance (percent of GDP): 2024/25: 3.1 percent; 2025/26: -2.0 percent; 2026/27–2030/31: -5.3, -4.9, -1.5, -0.5, -0.3.
  - Gross international reserves (US$ millions): 2024/25: 5,826; 2025/26: 5,826; 2026/27–2030/31: 5,876; 5,926; 5,976; 6,026; 6,076.
  - Trade balance (US$ millions): 2024/25: -4,204; 2025/26: -4,998; 2026/27–2030/31 projections: -6,587; -6,698; -6,485; -6,473; -6,615.
  - Exports (f.o.b., US$ millions): 2024/25: 1,860; 2025/26: 1,873; 2026/27–2030/31: 1,604; 1,697; 1,946; 2,054; 2,131.
  - Imports (f.o.b., US$ millions): 2024/25: 6,064; 2025/26: 6,870; 2026/27–2030/31: 8,191; 8,444; 8,431; 8,527; 8,745.
- Monetary and financial indicators:
  - Broad money (M3, fiscal-year J$ billions): 2024/25: 2,152.9; 2025/26: 2,184.0; 2026/27–2029/30: 2,377.6; 2,578.9; 2,772.8; 2,969.6.
  - Net foreign assets (fiscal-year, J$ billions): 2024/25: 954.3; 2025/26: 1,005.3; 2026/27–2029/30: 1,034.1; 1,066.5; 1,099.8; 1,134.3.
  - Financial soundness indicators (2024): NPLs/loans: 2.5 percent; Provision for loan losses/NPLs: 111.0 percent; Capital Adequacy Ratio (CAR): 14.5 percent; Return on average assets (2024 calendar year): 0.3 percent.

### Debt Sustainability Analysis (DSA) key findings and risks
- DSA final assessment: Sustainable.
- Overall risk of sovereign stress: Moderate.
- Public debt projections (Percent of GDP, baseline):
  - Actual 2024: 62.4; 2025: 68.6; 2026: 65.9; 2027: 65.9; 2028: 65.6; 2029: 65.5; 2030: 65.2; 2035: 58.4.
- Gross financing needs (Percent of GDP): average baseline GFN: 9.2; GFN values by year: 2024: 8.5; 2025: 7.8; 2026: 9.9; 2027: 10.2; 2028: 10.8; 2029: 8.1; 2035: 10.0.
- External debt (Percent of GDP): 2024: 64.3; 2025: 63.0; 2026: 63.8; 2027: 62.6; 2030: 52.3.
- External gross financing need (US$ billions): 2024: 2.6; 2025: 3.2; 2026: 4.1; 2027: 4.2; 2028: 3.5.
- Stress-test implications:
  - Under a natural disaster stress scenario, GFN needs would temporarily rise and public debt would stabilize at a higher level over the medium term.
  - Bound tests and scenario analyses show vulnerability to large real depreciation and combined shocks (e.g., one-time real depreciation of 30 percent in 2024 featured).
- Long-term risks and fiscal pressures:
  - Pension expenditures could lead to larger GFNs and higher long-run debt, highlighting the need for parametric reforms to the public pension system.
  - Climate-related adaptation expenditures are manageable: standardized scenario adds 0.4 percent of GDP and customized scenario adds 0.2 percent of GDP in long-run investment costs.
  - Health care expenditures currently not a significant long-run concern but require monitoring.

### Policy recommendations and staff advice
- Fiscal policy and disaster spending:
  - Temporary suspension of the fiscal rule and swift implementation of a comprehensive fiscal package are appropriate to provide relief and accelerate recovery.
  - Funds from the disaster risk financing framework should be spent efficiently and, for emergency relief, quickly.
  - Prompt return to the fiscal rule after the hurricane shock subsides to strengthen fiscal sustainability.
- Monetary and FX policy:
  - BOJ should continue to use the monetary policy rate as the main tool for inflation control.
  - Foreign exchange intervention should be limited and consistent with the Integrated Policy Framework.
  - Direct FX sales to energy-sector entities should be strictly time-bound, exceptional, and market-consistent.
  - Policy communication should reinforce commitment to exchange rate flexibility.
- Financial stability and reforms:
  - Maintain ongoing vigilance to monitor risks and preserve financial stability.
  - Improve coverage and quality of public finance data, expanding coverage to general government.
  - Record NMIA securitization and Montego Bay Airport securitization as debt accumulation under the 2014 GFSM methodology.
  - Undertake parametric reforms of the public pension system; continue actuarial reviews every three years.
  - Strengthen domestic debt market development and plan issuances for medium to long-term maturity.

### Staff recommendation and IMF decision summary
- Staff recommends Board approval of Jamaica’s request for a purchase under the Rapid Financing Instrument’s large natural disaster window of 80 percent of quota.
- Staff supports use of RFI resources for budget support if needed.
- Purchase amount referenced: 306.32 million or about US$415 million.
- Staff assessment: Jamaica’s capacity to repay the Fund is adequate and the RFI request is justified by damage estimated at 41 percent of GDP and urgent balance-of-payments needs.

*Source: IMF staff report, December 22, 2025; discussions virtually held during December 16–17, 2025. Approved by Nigel Chalk (WHD) and Jay Peiris (SPR).*

### 306.32 million or about US$415 million).

### JAMAICA

### Recent developments & outlook
- Over the last decade Jamaica reduced public debt, inflation, and external deficits and strengthened institutions (fiscal responsibility legislation, improved budget process and public financial management, creation of a fiscal council, inflation targeting framework), and enhanced disaster preparedness under the RSF arrangement.
- Prior to Hurricane Melissa: growth was rebounding and projected to exceed 2 percent in FY2025/26; headline inflation was 2.9 percent in October; public debt was on track to meet the Fiscal Responsibility Law target of 60 percent of GDP by end-FY2025/26; sovereign spreads fell below 100 bps in October.
- Hurricane Melissa (made landfall October 28 as a Category 5 hurricane with wind speeds reaching up to 185 mph) caused widespread damage: 45 confirmed dead, at least 90,000 displaced.
- Direct physical damages are estimated at US$8.8 billion (41 percent of GDP) per the GRADE assessment. Damages concentrated in western and central parishes (90 percent of total); St. Elizabeth parish registered US$2.3 billion in losses.
- Damage composition: residential buildings and contents US$3.7 billion (41 percent), infrastructure US$2.9 billion (33 percent), non-residential buildings US$1.8 billion (20 percent), agriculture US$0.4 billion (4 percent).
- Tourism (~one-third of the economy) and agriculture (8 percent of GDP) were severely affected. By early December, 78 percent of the electricity grid and 80 percent of telecommunication networks had been restored; 95 percent of roadways were open.
- Output is projected to contract by 4.3 percent in FY2025/26; output is expected to return to pre-hurricane level only in 2028.
- Hurricane Melissa is expected to cause a pronounced balance-of-payments shock:
  - Current account projected changes: surplus of 1.0 percent to deficit of 2.0 percent of GDP in FY2025/26; surplus of 0.1 percent to deficit of 5.3 percent of GDP in FY2026/27.
  - Urgent external financing need of over USD 1.4 billion (about 6 ½ percent of GDP).
  - Reserves are expected to edge up to US$5.9 billion, about 89 percent of the Fund’s reserve adequacy metric in FY2026/27.

### Estimated damages and economic losses
- GRADE estimate: direct physical damages US$8.8 billion (41 percent of GDP). Total economic costs will be higher when economic losses and "build back better" needs are included.
- Private sector insurance coverage for losses estimated between US$1 bn and US$4.2 bn.
- The GRADE assessment will inform a detailed sectoral evaluation scheduled for release in early 2026.

### Risks
- Main risk: spillovers from Hurricane Melissa creating more severe and long-lasting effects on the economy and balance of payments than currently expected.
- Staff baseline assumptions include tourism capacity gradually recovering by end-2026; downside if recovery is more protracted or reconstruction lags.
- Potential consequences of worse outcomes: need for higher reconstruction spending, additional external financing, impacts on debt and growth dynamics, social cohesion risks, and repeated natural disasters undermining recovery.

### Authorities' fiscal and emergency response
- Fiscal rule suspended for FY2025/26 and FY2026/27 under Article 48C of the Fiscal Responsibility Law (conditions: public disaster/public emergency, severe economic contraction >1.5 percent of GDP, or a financial sector crisis; suspension requires Independent Fiscal Commission verification and parliamentary approval).
- Third Supplementary Budget (announced early December 2025) increases spending and loans by around 3 percent of GDP for FY2025/26, including:
  - Hurricane Melissa response and relief package: 0.8 percent of GDP (road repairs, procurement of containerized homes, allocation for goods and services for affected people, National Cleanup program, temporary support to displaced tourism workers).
  - Higher spending for the Office of the Prime Minister: 0.5 percent of GDP.
  - Higher spending for the Ministry of Education, Skills, Youth and Information: 0.5 percent of GDP for school repairs and university subsidies.
  - Higher spending for the Ministry of Health and Wellness: 0.4 percent of GDP for health services and hospital reconstruction/modernization.
  - A loan to the private electric utility company: 0.7 percent of GDP to reconstruct the electric grid.
  - Permanent shift of the due date of corporate income tax payments (mid-March to mid-April) lowering revenues in FY2025/26 by 1.1 percent of GDP.
  - Increase in non-tax revenues from World Bank catastrophe bond and Caribbean Catastrophe Risk Insurance Facility payouts: 1.1 percent of GDP.

### Disaster risk financing framework and financing sources
- Jamaica’s multi-layered disaster risk financing framework includes:
  - Contingency Fund and National Natural Disaster Reserve Fund: 0.2 percent of GDP at time of hurricane (domestic).
  - World Bank catastrophe bond payout: 0.7 percent of GDP (recorded as non-tax revenue in FY2025/26).
  - Caribbean Catastrophe Risk Insurance Facility payments: 0.4 percent of GDP (recorded as non-tax revenue in FY2025/26).
  - Catastrophe Deferred Drawdown Option with the World Bank: up to 0.4 percent of GDP (adds to public debt).
  - Contingent Credit Facility with the IDB: up to 1.4 percent of GDP (adds to public debt).
- These layers were activated to enable rapid liquidity inflows and ease external financing needs in FY2025/26.

### Institutional and governance measures for reconstruction
- National Reconstruction and Resilience Authority (NARA) established (time-bound) to lead, coordinate, fast-track, and oversee rebuilding efforts; supported by World Bank technical assistance.
- Focus on climate-resilient infrastructure, especially road network reconstruction.
- All public sector purchases subject to Public Procurement Act of 2015 principles (transparency, fairness, integrity).
- Parliamentary oversight committee established to monitor relief, recovery, and reconstruction.
- Auditor General’s department conducting a real-time audit for transparency and accountability of resources used under the Hurricane Melissa relief initiative.
- Authorities intend to strengthen procurement and contract award practices to avoid past delays in project implementation; public investment expected to rise about 80 percent in nominal terms in FY2026/27 and thereafter grow broadly in line with nominal GDP.

### Staff assessment, IMF support, and Fund financing
- Staff view: RFI (Rapid Financing Instrument) is the appropriate instrument given urgent balance-of-payments needs.
- Staff confident authorities will pursue appropriate policies given strong track record and robust institutional framework.
- Requested access under the RFI is within applicable limits under the GRA; Jamaica’s debt remains sustainable and Jamaica maintains adequate capacity to repay the Fund.
- Staff recommends Board approval of Jamaica’s request for a purchase under the Rapid Financing Instrument’s large natural disaster window of 80 percent of quota.
- The purchase amount referenced is 306.32 million or about US$415 million.

*Source: IMF staff report, December 22, 2025; discussions virtually held during December 16–17, 2025. Approved by Nigel Chalk (WHD) and Jay Peiris (SPR).*

### 9.      Monetary policy will focus on ensuring a quick convergence of inflation back to its

### 9.      Monetary policy will focus on ensuring a quick convergence of inflation back to its 
target range.

### Monetary policy stance and inflation developments
- The hurricane caused a significant negative supply shock, particularly through damage to agricultural production, raising near-term food prices.
- Headline and core inflation in October were 2.9 percent and 3.2 percent respectively—both below the target range of 4.0 to 6.0 percent.
- Headline inflation rose to 4.4 percent in November; core inflation increased to 3.4 percent.
- The Bank of Jamaica (BOJ) intends to manage the monetary policy rate to:
  - Ensure inflation expectations are anchored.
  - Contain second-round effects from the supply shock.
- The core inflation measure excludes food, fuel, alcohol and tobacco, and transportation components.

### Foreign exchange intervention
- Given Jamaica’s shallow FX markets and the severe shock from hurricane Melissa, the BOJ has used FX intervention to smooth exchange rate adjustment and prevent disruptive market conditions.
- Rationale: Using interest rates alone would create costly trade-offs; modest FX sales can avoid these trade-offs consistent with the temporary nature of the BOP shock.
- FX sales were US$210 million in November.
- The BOJ initiated direct FX sales to selected entities in the energy sector on an emergency basis and announced future FX sales to be undertaken through a competitive auction, as noted in its November monetary policy press release.
- Staff recommendation: Use foreign exchange intervention only in limited circumstances as prescribed in the Integrated Policy Framework; direct FX sales to energy sector entities should be strictly time-bound, exceptional, and conducted on market-consistent terms.
- Policy communication should reinforce commitment to exchange rate flexibility as a shock absorber.

### Credit relief and financial-sector measures
- National Housing Trust (NHT) measures:
  - Six-month mortgage moratorium for residents in the most severely hurricane-hit areas (about 20,000 households).
  - Offer home improvement loans and grants to facilitate reconstruction and repair of damaged homes.
  - Households with NHT mortgages who suffered damage are eligible to submit insurance claims for their property.
  - The NHT offers means-tested, subsidized mortgage rates to eligible NHT contributors.
- Financial institutions:
  - Announced plans to offer moratoriums on loan repayments, with relief assessed on a case-by-case basis.
  - Banks continue to display strong liquidity and high levels of capitalization.
- BOJ actions:
  - Indicated it will maintain adequate system liquidity and ensure its standing facilities remain fully available.
  - Issued supervisory guidance for temporary voluntary customer relief arrangements for loan repayments.

### Debt sustainability and fiscal outlook
- Public debt dynamics:
  - Public debt declined from 101.3 percent of GDP in FY2020/21 to 62.4 percent of GDP in FY2024/25, supported by large primary surpluses.
  - Debt-to-GDP ratio expected to increase to 68.6 percent of GDP in FY2025/26 due to the economic contraction from hurricane Melissa, large reconstruction spending, and temporary suspension of the fiscal rule.
- Financing and primary balance:
  - In FY2025/26 and FY2026/27, additional financing needs are expected to be met by borrowing from the disaster risk financing framework instruments, the RFI, and a large drawdown in government deposits (anticipated at about 3 percent of GDP in FY2026/27).
  - The primary balance is projected to be about 2 percent of GDP lower toward the end of the medium-term projection horizon relative to the 2025 Article IV consultation (Box 3).
  - Borrowing from international financial institutions is expected to contribute to additional financing needs.
  - Authorities remain committed to resuming a downward path for the debt-to-GDP ratio once the hurricane shock has receded.
- RFI and Fund engagement:
  - Damage estimates exceed 20 percent of GDP at 41 percent of GDP, meeting the RFI large natural disaster window eligibility.
  - Jamaica had total credit outstanding to the Fund of SDR591 million as of end-November 2025 (154.31 percent of quota), comprising RST loans (150 percent of quota) and EFF purchases (4.31 percent of quota).
  - Access of 80 percent of quota is within applicable access limits and equals the annual maximum under the RFI’s large natural disaster window.
  - Debt outstanding to the IMF would reach around 230 percent of quota (80 percent of quota excluding the RSF) or 5.3 percent of GDP in 2026.
  - Debt service to the Fund would peak in 2030 at SDR191 million (SDR170 million excluding the RSF) corresponding to 1 percent of GDP, 3.1 percent of exports or 4.3 percent of gross international reserves.
  - Capacity to repay the Fund is assessed as adequate even if the hurricane shock becomes more persistent.

### Comparative fiscal projections (key numerical highlights from Box 3 and text table)
- Panel C projection differences (B)-(A) relative to nominal GDP base year 2015 (in pp) for the primary balance:
  - FY2025/26: primary balance deteriorates by 3.3 percent of GDP.
  - FY2026/27: primary balance deteriorates by 4.1 percent of GDP.
  - By FY2029/30: primary balance remains about 2 percent of GDP lower.
- Memorandum item: Nominal GDP (billion J$) projections: 3,339; 3,498; 3,520; 3,811; 4,111; 4,392; 4,668 (for the projection years shown).

### Financial sector resilience and risks
- Insurance and reinsurance:
  - Property loans typically require insurance coverage; insurance companies have reinsured a large share of liabilities with overseas companies, mitigating domestic insurance-sector balance-sheet impact.
- Bank exposure to affected sectors:
  - Tourism: 5.3 percent credit exposure.
  - Construction: 3.5 percent credit exposure.
  - Agriculture: 1.1 percent credit exposure.
- System resilience:
  - Financial system remains well-capitalized and liquid.
  - BOJ stress tests and systemic risk evaluations indicate sufficient capital and liquidity to absorb the shock.
- Staff advice: Close monitoring and readiness to address emerging risks remain essential as clarity on economic impact and recovery timelines improves.

### Policy recommendations (Staff)
- Support for authorities’ response:
  - Temporary suspension of the fiscal rule and swift implementation of a comprehensive fiscal package are appropriate to provide relief and accelerate recovery.
  - Funds from the disaster risk financing framework should be spent efficiently and, for emergency relief, quickly.
  - Prompt return to the fiscal rule after the hurricane shock subsides to strengthen fiscal sustainability.
- Monetary and FX policy guidance:
  - BOJ should continue to use the monetary policy rate as the main tool for inflation control.
  - Foreign exchange intervention should be limited and consistent with the Integrated Policy Framework.
  - Direct FX sales to energy-sector entities should be strictly time-bound, exceptional, and market-consistent.
  - Policy communication should reinforce commitment to exchange rate flexibility.
- Financial stability:
  - Maintain ongoing vigilance by authorities to monitor risks and preserve financial stability.

### Authorities' views and intentions
- Expect a sharp near-term economic contraction due to infrastructure damage and activity disruptions.
- Labor market: employment expected to fall in the near term from a previously tight market.
- Inflation: expected to rise sharply, mainly due to agricultural impact.
- Fiscal intentions:
  - Authorities foresee a reduction in the primary surplus to 1.7 percent of GDP in FY2025/26.
  - Further reduction to near zero percent of GDP in FY2026/27 to allow for reconstruction.
  - Additional spending to be met from the disaster risk financing framework, domestic borrowing, support from official creditors (including the RFI), and drawdown of cash buffers.
  - Commitment to fiscal responsibility and debt consolidation over the medium term.
- Monetary policy:
  - BOJ remains committed to limiting inflationary effects to protect vulnerable groups and support recovery.
  - Data-dependent policy will focus on monitoring second-round impacts of higher food prices on core inflation to secure convergence to the target range and anchor inflation expectations.
  - Justified short-term FX sales to prevent disorderly market conditions and unwarranted monetary policy trade-offs.
  - Banking sector described as well-positioned with high provisioning, strong capital positions, and low non-performing loans.

### Staff appraisal (summary)
- Hurricane Melissa: top-end Category 5, estimated damage about 41 percent of GDP concentrated in western Jamaica.
- Near-term growth expected to weaken significantly with urgent balance-of-payments needs.
- Disaster risk financing framework provided immediate liquidity but resources are insufficient for the scale of damage.
- Authorities’ response deemed appropriate and anchored in strong policy frameworks.
- Temporary reduction of the primary surplus and suspension of the fiscal rule are warranted; achieving the Fiscal Responsibility Law’s debt target of 60 percent is delayed.
- Staff welcomes commitment to prudent fiscal management and recommends phasing out disaster-related expenditures as the shock dissipates.
- BOJ’s inflation-targeting stance remains appropriate to anchor expectations and contain second-round supply-shock effects.

*International Monetary Fund. 9. Monetary policy will focus on ensuring a quick convergence of inflation back to its target range.*

### 23.      Staff supports the authorities’ request for an RFI under the large natural disaster

### 23. Staff supports the authorities’ request for an RFI under the large natural disaster window

### IMF decision and immediate financing
- Staff supports an RFI under the large natural disaster window in the amount of 80 percent of quota (306.32 million, or about US$415 million).
- Justification: the extent of damage—estimated at 41 percent of GDP—and the resulting urgent balance-of-payments needs.
- Staff supports the use of RFI resources for budget support, should the need arise.
- Assessment: Jamaica’s capacity to repay the Fund remains adequate.

### Damage and macroeconomic impact (key indicators drawn from the chapter)
- Damage estimate: 41 percent of GDP.
- RFI size: 80 percent of quota (306.32 million, or about US$415 million).
- Population (2024): 2.84 million.
- Per capita GDP (2024): US$7778.
- Unemployment rate (July 2025): 3.3 percent.

### Real sector developments (selected annual/period figures)
- Real GDP (fiscal-year series): 2021/22: 9.6; 2022/23: 5.5; 2023/24: 1.9; 2024/25: -0.5; 2025/26: -4.3; 2026/27: 0.8; 2027/28: 3.0; 2028/29: 2.0; 2029/30: 1.5; 2030/31: 1.5.
- Nominal GDP (fiscal-year series): 2021/22: 20.1; 2022/23: 19.2; 2023/24: 10.4; 2024/25: 4.8; 2025/26: 0.6; 2026/27: 8.3; 2027/28: 7.9; 2028/29: 6.8; 2029/30: 6.3; 2030/31: 6.3.
- Consumer price index (end of period, fiscal-year): 2021/22: 11.3; 2022/23: 6.2; 2023/24: 5.6; 2024/25: 5.0; 2025/26: 9.5; 2026/27–2030/31: 5.0 (each year).

### Fiscal sector highlights (selected fiscal-year figures; percent of GDP unless stated)
- Budgetary revenue: 2024/25: 30.3 percent; 2025/26: 30.3 percent; projections 2026/27–2030/31: 28.2, 28.2, 28.1, 28.2, 28.2.
- Tax revenue: 2024/25: 25.2 percent; 2025/26: 24.7 percent; projections 2026/27–2030/31: 25.6, 25.7, 25.6, 25.6, 25.6.
- Budgetary expenditure: 2024/25: 30.0 percent; 2025/26: 33.8 percent; projections 2026/27–2030/31: 33.0, 32.1, 31.0, 31.0, 30.9.
- Primary expenditure: 2024/25: 24.9 percent; 2025/26: 28.6 percent; projection 2026/27: 28.0 percent.
- Interest payments: 2024/25: 5.1 percent; 2025/26: 5.2 percent; 2026/27–2030/31: 5.0, 4.8, 4.6, 4.5, 4.4.
- Budget balance (fiscal-year): 2024/25: 0.2 percent of GDP; 2025/26: -3.4 percent; projections 2026/27–2030/31: -4.8, -3.8, -2.9, -2.8, -2.8.
- Central government primary balance: 2024/25: 5.4 percent; 2025/26: 1.7 percent; projections 2026/27–2030/31: 0.2, 1.0, 1.7, 1.7, 1.7.
- Public debt (FRL definition): 2024/25: 62.4 percent of GDP; 2025/26: 68.6 percent; projections 2026/27–2030/31: 65.9, 65.9, 65.6, 65.5, 65.2.

### External sector highlights (selected fiscal-year and USD figures)
- Current account balance (percent of GDP): 2024/25: 3.1 percent; 2025/26: -2.0 percent; projections 2026/27–2030/31: -5.3, -4.9, -1.5, -0.5, -0.3.
- Gross international reserves (US$ millions): 2024/25: 5,826; 2025/26: 5,826; projections 2026/27–2030/31: 5,876; 5,926; 5,976; 6,026; 6,076.
- Trade balance (US$ millions): 2024/25: -4,204; 2025/26: -4,998; projections 2026/27–2030/31: -6,587; -6,698; -6,485; -6,473; -6,615.
- Exports (f.o.b., US$ millions): 2024/25: 1,860; 2025/26: 1,873; 2026/27–2030/31: 1,604; 1,697; 1,946; 2,054; 2,131.
- Imports (f.o.b., US$ millions): 2024/25: 6,064; 2025/26: 6,870; 2026/27–2030/31: 8,191; 8,444; 8,431; 8,527; 8,745.

### Monetary and financial sector (selected indicators)
- Broad money (M3, fiscal-year J$ billions): 2024/25: 2,152.9; 2025/26: 2,184.0; projections 2026/27–2029/30: 2,377.6; 2,578.9; 2,772.8; 2,969.6.
- Net foreign assets (fiscal-year, J$ billions): 2024/25: 954.3; 2025/26: 1,005.3; projections 2026/27–2029/30: 1,034.1; 1,066.5; 1,099.8; 1,134.3.
- Credit to private sector (fiscal-year, J$ billions): 2024/25: 1,582.5; 2025/26: 1,610.1; projections 2026/27–2029/30: 1,765.7; 1,934.6; 2,105.2; 2,286.2.
- Financial soundness indicators (2024): NPLs/loans: 2.5 percent; Provision for loan losses/NPLs: 111.0 percent; Capital Adequacy Ratio (CAR): 14.5 percent; Return on average assets (2024 calendar year): 0.3 percent.

### Fund exposure and debt-service context (selected IMF-related metrics)
- RFI requested and recorded in financing lines (Table 3): RFI............415...............
- Table 6 (Indicators of Fund Credit) highlights: Fund Obligations Based on Existing Credit (millions of SDRs) Principal: 28.3; Charges and interest (2025): 40.5; Fund Obligations Based on Existing and Prospective Credit (millions of SDRs): 164.6 (2025).
- Outstanding IMF Credit Based on Existing and Prospective Drawings (millions of SDRs) for 2025: 583.8; Percent of quota (2025): 152.5 percent.

### Policy implications and operational notes (as reflected in the text)
- The request for RFI is supported on the grounds of the large scale of damage (41 percent of GDP) and urgent balance-of-payments needs.
- Staff explicitly supports possible use of RFI resources for budget support if necessary.
- The authorities’ repayment capacity is judged adequate by staff, supporting the RFI approval.

*Source: 1jamea2026001-source-pdf (IMF staff text provided).*

### Annex I. Debt Sustainability Analysis

### Annex I. Debt Sustainability Analysis

### DSA Summary Assessment
- Final Assessment: Sustainable
- Commentary:
  - Jamaica faces a moderate overall risk of sovereign stress.
  - After the COVID-19 shock, public debt quickly resumed its downward trajectory.
  - Following Hurricane Melissa, under current policies, public debt is projected to rise in the near term to accommodate reconstruction spending, before declining modestly over the medium term.
  - Long-term risks are moderate.
  - The large amortization module shows gradual declines in GFN and debt relative to GDP under both the baseline and customized scenarios.
  - Climate-related expenditures are manageable. They would not significantly impact debt sustainability in the long run, even under the customized scenario.
  - Health care expenditures are unlikely to pose significant concerns.
  - Pension expenditures, however, would lead to larger GFNs and a higher debt level over the long run, highlighting the need for parametric reforms to the public pension system.

### Risk of Sovereign Stress (Table 1)
- Mechanical Signal: (deleted before publication)
- Overall...Moderate
- Near term 1/n.a.
- Medium termLowModerate
- FanchartModerate...
- GFNLow...
- Stress test...
- Long term...Moderate
- Debt stabilization in the baseline: Yes
- Medium-term risks are assessed as moderate. The fan chart indicates moderate risk, reflecting volatility in key macroeconomic indicators. The GFN tool points to low risk, given contained financing needs and reduced rollover exposure. The authorities have proactively mitigated these risks through prudent debt management policies and debt buybacks.
- Jamaica's overall risk of sovereign stress is moderate, reflecting a moderate level of vulnerability in the medium and long term.

### Debt Coverage and Disclosures (Figure 1)
- 1. Debt coverage in the DSA: 1/CGGGNFPSCPSOther
- 1a. If central government, are non-central government entities insignificant? Yes
- 2. Subsectors included in the chosen coverage in (1) above:
  - Subsections captured in the baseline
    - 1 Budgetary central government: Yes
    - 2 Extra budgetary funds (EBFs): No
    - 3 Social security funds (SSFs): No
    - 4 State governments: No
    - 5 Local governments: No
    - 6 Public nonfinancial corporations: Yes
    - 7 Central bank: No
    - 8 Other public financial corporations: No
- 3. Instrument coverage:
- 4. Accounting principles:

### Notes and Observations
- Source: Fund staff.
- Note: The risk of sovereign stress is a broader concept than debt sustainability. Unsustainable debt can only be resolved through exceptional measures (such as debt restructuring). In contrast, a sovereign can face stress without its debt necessarily being unsustainable, and there can be various measures—that do not involve a debt restructuring—to remedy such a situation, such as fiscal adjustment and new financing.
- 1/ The near-term assessment is not applicable in cases where there is a disbursing IMF arrangement. In surveillance-only cases or in cases with precautionary IMF arrangements, the near-term assessment is performed but not published.
- 2/ A debt sustainability assessment is optional for surveillance-only cases and mandatory in cases where there is a Fund arrangement. The mechanical signal of the debt sustainability assessment is deleted before publication. In surveillance-only cases or cases with IMF arrangements with normal access, the qualifier indicating probability of sustainable debt ("with high probability" or "but not with high probability") is deleted before publication.

*Source: Annex I. Debt Sustainability Analysis.*

### 5. Debt consolidation across sectors:

### 1jamea2026001-source-pdf - 5. Debt consolidation across sectors

### Overview
- DSA coverage: debt issued by central government, public bodies and debt guaranteed by central government.
- Authorities are improving coverage and quality of public finance data, including expanding the 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; same treatment applies to the securitization of revenue flows from Montego Bay Airport in July 2025.
- Commentary: The DSA covers central government, public bodies and central-government-guaranteed debt. Recording securitizations as debt would lower the primary surplus in FY2024/25 and raise debt relative to the authorities’ definition.

### Public debt trajectory and baseline projections (Table 2: Baseline Scenario)
- Public debt (Percent of GDP):
  - Actual 2024: 62.4
  - 2025: 68.6
  - 2026: 65.9
  - 2027: 65.9
  - 2028: 65.6
  - 2029: 65.5
  - 2030: 65.2
  - 2031: 64.6
  - 2032: 63.4
  - 2033: 61.9
  - 2034: 60.2
  - 2035: 58.4
- Change in public debt (Percent of GDP):
  - 2024: -4.1
  - 2025: 6.2
  - 2026: -2.7
  - 2027: 0.0
  - 2028: -0.4
  - 2029: 0.0
  - 2030: -0.3
  - 2031: -0.6
  - 2032: -1.2
  - 2033: -1.5
  - 2034: -1.7
  - 2035: -1.8
- Contribution of identified flows (Percent of GDP):
  - 2024: -3.3
  - 2025: 4.6
  - 2026: -1.4
  - 2027: 0.0
  - 2028: -0.3
  - 2029: 0.0
  - 2030: -0.2
  - 2031: -0.6
  - 2032: -1.2
  - 2033: -1.5
  - 2034: -1.6
  - 2035: -1.7
- Primary deficit (Percent of GDP):
  - 2024: -5.4
  - 2025: -1.7
  - 2026: -0.2
  - 2027: -1.0
  - 2028: -1.7
  - 2029: -1.7
  - 2030: -1.7
  - 2031: -2.0
  - 2032: -2.5
  - 2033: -2.7
  - 2034: -2.7
  - 2035: -2.7
- Noninterest revenues (Percent of GDP):
  - 2024: 30.3
  - 2025: 30.3
  - 2026: 28.2
  - 2027: 28.2
  - 2028: 28.1
  - 2029: 28.2
  - 2030: 28.2
  - 2031: 28.9
  - 2032: 29.1
  - 2033: 29.3
  - 2034: 29.3
  - 2035: 29.4
- Noninterest expenditures (Percent of GDP):
  - 2024: 24.9
  - 2025: 28.6
  - 2026: 28.0
  - 2027: 27.3
  - 2028: 26.4
  - 2029: 26.4
  - 2030: 26.5
  - 2031: 26.9
  - 2032: 26.7
  - 2033: 26.7
  - 2034: 26.7
  - 2035: 26.7
- Automatic debt dynamics (Percent of GDP):
  - 2024: 2.7
  - 2025: 5.6
  - 2026: 1.8
  - 2027: 1.0
  - 2028: 1.3
  - 2029: 1.7
  - 2030: 1.5
  - 2031: 1.4
  - 2032: 1.2
  - 2033: 1.2
  - 2034: 1.1
  - 2035: 1.0
- Real interest rate and relative inflation (Percent):
  - 2024: 3.0
  - 2025: 2.8
  - 2026: 2.4
  - 2027: 2.9
  - 2028: 2.6
  - 2029: 2.7
  - 2030: 2.5
  - 2031: 2.4
  - 2032: 2.2
  - 2033: 2.1
  - 2034: 2.0
  - 2035: 1.9
- Real growth rate (Percent):
  - 2024: 0.3
  - 2025: 2.8
  - 2026: -0.5
  - 2027: -1.9
  - 2028: -1.3
  - 2029: -1.0
  - 2030: -1.0
  - 2031: -1.0
  - 2032: -1.0
  - 2033: -0.9
  - 2034: -0.9
  - 2035: -0.9
- Other identified flows (Percent of GDP):
  - 2024: -0.6
  - 2025: 0.7
  - 2026: -3.1
  - 2027–2035: 0.0 (all years)
- Contribution of residual (Percent of GDP):
  - 2024: -0.8
  - 2025: 1.6
  - 2026: -1.3
  - 2027–2035: 0.0 to -0.1 as shown (mostly 0.0)
- Gross financing needs (Percent of GDP):
  - 2024: 8.5
  - 2025: 7.8
  - 2026: 9.9
  - 2027: 10.2
  - 2028: 10.8
  - 2029: 8.1
  - 2030: 8.5
  - 2031: 7.9
  - 2032: 7.8
  - 2033: 7.3
  - 2034: 8.3
  - 2035: 10.0
- Debt service (Percent of GDP) (listed as "of which: debt service"):
  - 2024: 13.9
  - 2025: 9.5
  - 2026: 10.1
  - 2027: 11.2
  - 2028: 12.5
  - 2029: 9.8
  - 2030: 10.2
  - 2031: 9.9
  - 2032: 10.3
  - 2033: 10.0
  - 2034: 10.9
  - 2035: 12.7
- Gross financing needs by currency (Percent of GDP):
  - Local currency (selected years): 2024: 7.0; 2025: 3.5; 2026: 3.7; 2027: 5.2; 2028: 6.6; 2029: 4.9; 2030: 4.5; 2031: 6.4; 2032: 6.6; 2033: 5.7; 2034: 6.2; 2035: 6.7
  - Foreign currency (selected years): 2024: 6.8; 2025: 6.0; 2026: 6.3; 2027: 5.9; 2028: 5.8; 2029: 4.9; 2030: 5.7; 2031: 3.6; 2032: 3.7; 2033: 4.3; 2034: 4.7; 2035: 5.9
- Memo key macro variables:
  - Real GDP growth (percent):
    - 2024 actual: -0.5
    - 2025: -4.3
    - 2026: 0.8
    - 2027: 3.0
    - 2028: 2.0
    - 2029–2035: 1.5 (repeated)
  - Inflation (GDP deflator; percent): 2024: 5.3; 2025: 5.2; then 7.4 in 2026; 4.7 thereafter through projection years at 4.7
  - Nominal GDP growth (percent): 2024: 4.8; 2025: 0.6; 2026: 8.3; 2027: 7.9; then 6.8, 6.3, and 6.3 thereafter
  - Effective interest rate (percent): 2024: 8.3; 2025: 8.0; 2026: 7.7; 2027: 7.7; 2028: 7.2; subsequent years decline to 6.6 by 2035

- Projection commentary: Public debt is projected to rise in FY2025/26 due to Hurricane Melissa, decline in FY2026/27 following a substantial drawdown of government deposits, and then continue a modest downward trend thereafter.

### Debt structure, holders, instruments, currency, and maturity
- Figure highlights (percent of GDP and other indicators):
  - Debt by Currency: Foreign currency vs Local currency shown across 2015–2035 with a projected decline in external share over the long term as authorities support domestic debt market development.
  - Public Debt by Holder: categories include External private creditors, External official creditors, Domestic other creditors, Domestic commercial banks, Domestic central bank.
  - Public Debt by Instruments: Marketable debt vs Nonmarketable debt.
  - Public Debt by Maturity: ≤ 1 year, 1–5 years, > 5 years. Residual maturity: 10.1 years.
  - Public Debt by Governing Law, 2024: Domestic law, Foreign law ex. multilateral, Multilateral.
- Commentary: Most planned issuances are for medium to long-term maturity. The share of external debt is expected to decline over the long term.

### Realism of baseline assumptions
- The realism analysis "does not point to major concerns."
- Past forecast errors do not reveal systematic biases and the projected debt reduction is within norms.
- Forecast track record and historical output gap revisions summarized relative to comparator group: Emerging Markets, Non-Commodity Exporter, Program.
- Laubach (2009) rule referenced for implied spread increases: "bond spreads increase by about 4 bps in response to a 1 ppt increase in the projected debt-to-GDP ratio."

### Medium-term risk analysis (Figure 4)
- Debt fanchart module:
  - Final fanchart (Percent of GDP) value examples: 40.1, 44.6, 34.4 (with small contribution numbers 0.6, 0.4, 0.7 respectively).
  - Debt fanchart index (DFI): 1.7 — Risk signal: Moderate (notes: low if DFI < 1.13; high if DFI > 2.08).
- Gross financing needs (GFN) module:
  - Average baseline GFN: 9.2 (percent of GDP)
  - GFN financeability index (GFI): 6.7 — Risk signal: Low (notes: low if GFI < 7.6; high if GFI > 17.9).
- Banking claims and stress:
  - Initial Banks' claims on gen. govt (pct bank assets): 8.6
  - Change in banks' claims in stress (pct bank assets): 2.2
- Medium-term index: Value, Weight, Contribution aggregate yields Risk signal: 5/ Final assessment: Prob. of missed crisis, 2025-2030, if stress not predicted: 9.1 pct. Prob. of false alarms, 2025-2030, if stress predicted: 42.0 pct.
- Commentary: The Debt Fanchart Module signals moderate risk, driven by the wide fanchart at the end of the projection horizon reflecting Jamaica’s history of high public debt volatility. Under a natural disaster stress scenario, GFN needs would temporarily rise, and public debt would stabilize at a higher level over the medium term.

### Long-term risk analysis (Figure 5)
- Overall risk indication: Long-term risk is assessed to be moderate.
- Custom scenario assumptions (long-term):
  - Real GDP growth: 2.0%
  - Primary Balance-to-GDP ratio: 1.0%
  - Real depreciation: -2.4%
  - Inflation (GDP deflator): 5.0%
- Commentary: The large amortization module shows gradual declines in GFN and debt relative to GDP both under the baseline and customized scenarios. 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.
- Demographics: Pensions
  - Commentary: Pension expenditures under the current system would lead to larger GFNs and a moderate rise in debt in the long run compared to the baseline. Need to undertake parametric reforms of the current public pension system. Actuarial reviews, scheduled every three years, should continue to inform parametric reforms to the National Insurance Scheme. Parametric changes to the pension plan for public employees based on actuarial reviews would help reduce its financial burden.
- Demographics: Health
  - Commentary: Current health care expenditures would not pose significant sustainability concerns. A scenario of higher growth of healthcare costs could prevent sustained declines in GFN and public debt in the long run.
- Climate Change: Adaptation
  - Commentary: Climate-related adaptation expenditures are manageable and would not significantly impact debt sustainability. Standardized and customized scenarios add costs associated with investments of 0.4 percent of GDP and 0.2 percent of GDP over the long run, respectively.

### External debt sustainability (Table 3 and Figure 6)
- External debt baseline (Percent of GDP):
  - 2020: 95.9
  - 2021: 84.9
  - 2022: 71.7
  - 2023: 68.2
  - 2024: 64.3
  - 2025: 63.0
  - 2026: 63.8
  - 2027: 62.6
  - 2028: 59.9
  - 2029: 56.1
  - 2030: 52.3
- Debt-stabilizing non-interest current account (percent): -2.9 (noted in table footnote).
- Change in external debt (Percent of GDP): 2020: 19.4; 2021: -11.0; 2022: -13.1; 2023: -3.5; 2024: -3.9; 2025: -1.3; 2026: 0.8; 2027: -1.2; 2028: -2.7; 2029: -3.8; 2030: -3.8
- Identified external debt-creating flows (Percent of GDP): 2020: 9.3; 2021: -12.1; 2022: -16.9; 2023: -11.4; 2024: -7.4; 2025: 2.7; 2026: 2.4; 2027: 0.7; 2028: -2.1; 2029: -2.8; 2030: -2.9
- Current account deficit, excluding interest payments (Percent of GDP): 2020: -1.0; 2021: -1.6; 2022: -3.6; 2023: -5.0; 2024: -5.1; 2025: 0.2; 2026: 3.5; 2027: 3.2; 2028: -0.2; 2029: -1.2; 2030: -1.4
- Contribution from nominal interest rate (Percent of GDP): values around 2.2, 2.2, 1.9, 2.1, 2.1, 1.8, 1.8, 1.8, 1.7, 1.7, 1.7 (2020–2030)
- Contribution from real GDP growth (Percent of GDP): 2020: 8.6; 2021: -8.2; 2022: -3.9; 2023: -1.2; 2024: 0.3; 2025: 2.8; 2026: -0.5; 2027: -1.8; 2028: -1.2; 2029: -0.9; 2030: -0.8
- External debt-to-exports ratio (in percent): 2020: 521.9; 2021: 286.6; 2022: 201.1; 2023: 200.3; 2024: 199.6; 2025: 221.2; 2026: 222.4; 2027: 214.3; 2028: 190.1; 2029: 174.9; 2030: 163.0
- Gross external financing need (in billions of US dollars): 2020: 2.1; 2021: 2.7; 2022: 2.1; 2023: 2.1; 2024: 2.6; 2025: 3.2; 2026: 4.1; 2027: 4.2; 2028: 3.5; 2029: 2.7; 2030: 2.8
- Gross external financing need (in percent of GDP): 2020: 14.0; 2021: 16.6; 2022: 10.9; 2023: 10.0; 2024: 11.7; 2025: 10-year and 15-year comparisons shown in table; selected years show 10.3 to 17.8 as decade averages.
- Scenario information and bound tests (Figure 6):
  - Bound tests show external debt (Percent of GDP) under interest rate shock, growth shock, current account shock, combined shock, real depreciation shock (one-time real depreciation of 30 percent occurs in 2024).
  - Sample box figures: Baseline and scenario averages shown; examples: Baseline 52 (external debt percent), Historical 31, combined shock 58, 30% depreciation scenario 81.
  - Shocks: permanent one-half standard deviation shocks; permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.

### Key policy-relevant findings and recommendations (from commentary and analysis)
- Improve coverage and quality of public finance data, expanding coverage to general government.
- Record NMIA securitization and Montego Bay Airport securitization as debt accumulation (per 2014 GFSM), which affects FY2024/25 primary surplus and debt metrics.
- Strengthen domestic debt market development to reduce external debt share over the long term; most planned issuances are medium to long-term.
- Prepare for natural disaster stresses: under a natural disaster stress scenario, GFN needs would temporarily rise and public debt would stabilize at a higher level.
- Pension and social insurance reforms:
  - Undertake parametric reforms of the current public pension system to avoid larger GFNs and a moderate rise in long-run debt.
  - Continue actuarial reviews every three years to inform parametric reforms to the National Insurance Scheme to ensure increased coverage does not compromise fiscal sustainability.
  - Make parametric changes to the pension plan for public employees based on actuarial reviews to reduce the fiscal burden.
- Health and climate:
  - Monitor health-care cost growth; baseline suggests no significant long-run sustainability concern, but higher healthcare cost growth would pose fiscal pressures.
  - Climate-related adaptation expenditures are manageable; standardized scenario adds 0.4 percent of GDP and customized scenario adds 0.2 percent of GDP in long-run investment costs.

*Source: IMF staff estimates and projections as presented in the DSA chapter "5. Debt consolidation across sectors."*

### Appendix I. Letter of Intent

### Appendix I. Letter of Intent

### Hurricane event and immediate impacts
- Hurricane Melissa made landfall on October 28 as a Category 5 hurricane with sustained winds of about 185 mph (295 km/h), storm surges up to 4 meters (13 feet), and widespread flooding from intense rainfall.
- Ranked among the most powerful Atlantic hurricanes to make landfall on record and the most powerful storm ever to strike Jamaica, surpassing Hurricane Gilbert in 1988.

### Damage, displacement, and human toll
- Total direct physical damage: US$8.8 billion — equivalent to approximately 41 percent of Jamaica’s 2024 GDP.
- Geographic concentration: St. Elizabeth, St. James, Westmoreland, Trelawny, Manchester, St. Ann, and Hannover together accounted for 90 percent of total damage.
- Displacement and casualties: at least 90,000 people displaced; 45 reported fatalities; 13 missing persons.
- Most severe damage to: residential and productive assets, electricity, water, telecommunications, and road infrastructure.

### Macroeconomic impact and projections
- GDP: projected contraction of 4.3 percent in fiscal year 2025/26.
  - This is 6.5pp lower than the latest Article IV growth forecast of about +2.2 percent.
- Recovery timeline: full return to pre-hurricane output levels projected to require three to five years.
- Inflation: projected to rise over the next year driven by food prices and passthrough of import costs; expected to fall back to the Bank of Jamaica’s target as monetary policy anchors expectations and excess capacity pressures ease.

### Fiscal and external sector pressures
- Fiscal stance: primary surplus expected to fall to 1.7 percent of GDP in FY2025/26 and to near zero percent of GDP in FY2026/27.
- External financing need: the shock created an urgent external financing need of about 6.5 percent of GDP.
- Current account projections:
  - FY2025/26: shift from a surplus of 1.0 percent to a deficit of 2.0 percent of GDP.
  - FY2026/27: shift from a surplus of 0.1 percent to a deficit of 5.3 percent of GDP.
- Financing sources envisaged: disaster risk financing framework, support from official creditors (including the RFI), drawdown of cash buffers, and FDI inflows to support reconstruction (notably in tourism).

### Financial sector resilience
- Banks: strong capital positions, adequate liquidity, and low non-performing loans.
- Supervisory stance: financial system supervisors will remain vigilant, closely monitoring risks and evaluating appropriate policy responses to preserve financial stability.

### Disaster risk financing framework and financing needs
- Pre-existing framework components: Government of Jamaica’s Contingency Fund and National Natural Disaster Reserve Fund, parametric insurance from the Caribbean Catastrophe Risk Insurance Facility (CCRIF), a World Bank-supported catastrophe bond and Catastrophe Deferred Drawdown Option, and a contingent credit facility with the Inter-American Development Bank (IDB).
- Total inflows from these instruments and government contingency resources: US$625 million.
- Gap: total damage far exceeds available coverage and resources under the disaster risk financing framework.
- IMF request: emergency financing under the Rapid Financing Instrument (RFI)’s large natural disaster window in the amount of SDR306.32 million, equivalent to 80 percent of quota.
  - Also presented as SDR306.32 million or about US$415 million (80 percent of quota).
- Role of RFI resources: provide budget support for urgent recovery and reconstruction to restore productive capacity and make space for critical social spending including rebuilding schools and hospitals.

### Authorities’ commitments and policy assurances
- Macroeconomic stance: commitment to continued macroeconomic stability and avoidance of measures that would exacerbate balance of payments difficulties.
- Exchange and trade policies: no intention to impose new or intensify existing restrictions on payments and transfers for current international transactions, trade restrictions, or multiple currency practices, nor to enter into bilaterial payments agreements inconsistent with Article VIII of the Fund's Articles of Agreement; will consult the Fund ahead of any revisions.
- Safeguards: commitment to undergo a safeguards assessment; will provide IMF staff with the Bank of Jamaica’s most recently completed external audit reports and authorize external auditors to hold discussions with IMF staff.
- Onlending arrangements: if IMF financing is onlent to the government, a framework agreement will be established between the Ministry of Finance and the Public Service and the Bank of Jamaica clarifying responsibilities for timely servicing of Jamaica’s obligations to the IMF.
- Transparency: authorization for the Fund to publish this Letter of Intent and the staff report for the RFI disbursement request.
- Reconstruction strategy: fiscally prudent plan focused on climate-smart reconstruction to upgrade infrastructure, strengthen growth, reduce vulnerability to future climate-related events, and lower long-term maintenance costs.
- Collaboration: intention to draw on technical assistance from Fund staff and other international agencies; continued open dialogue and collaboration with the Fund and other partners to manage risks and ensure effective implementation of the RFI.

### Context on Jamaica’s prior macroeconomic performance
- Past program: successful completion of the Precautionary and Liquidity Line/Resilience and Sustainability Facility (PLL/RSF) arrangements in 2024/25, substantially outperforming on indicative targets and implementing required reforms.
- Debt reduction track record: debt to GDP ratio reduced from 144 percent of GDP in 2012/13 to 62.4 percent of GDP in FY2024/25 and was on track to meet the 60% of GDP benchmark ahead of target.

### Concluding remarks
- Humanitarian and economic costs: Hurricane Melissa imposed severe humanitarian and economic costs.
- Authorities’ stance: committed to building back better in a climate-smart fashion, mobilizing private investment with multilateral support, ensuring transparency and governance, and maintaining medium-term fiscal responsibility while supporting recovery.

*Appendix I. Letter of Intent — December 22, 2025*

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_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1jamea2026001-source-pdf.pdf_