IMF Executive Board Concludes 2025 Article IV Consultation with Jamaica

IMF News, June 25, 2025

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• Published: June 25, 2025

Executive Board conclusion and assessment

• The Executive Board concluded the 2025 Article IV consultation with Jamaica on June 12, 2025, and endorsed the staff appraisal without a meeting.
• Executive Directors endorsed staff’s appraisal highlighting:
  • Over more than a decade, Jamaica implemented sound macroeconomic policies supported by strong policy frameworks, allowing accumulation of meaningful policy buffers, reduction of public debt, anchoring of inflation, and improvement of the external position.
  • Recent policy efforts strengthened fiscal responsibility, public sector compensation effectiveness, tax and customs administration, financial oversight, and climate resilience, including through completed PLL/RSF arrangements.
  • The economy declined in FY2024/25 due to hurricane Beryl and tropical storm Raphael but is rebounding and projected to grow at its potential rate with risks broadly balanced.
  • Maintaining primary fiscal surpluses to reach the FRL’s ceiling of 60 percent of GDP by FY2027/28 remains essential.
  • Recommendation to incorporate an explicit operational medium-term debt anchor in the Fiscal Responsibility Law (FRL) at a level below 60 percent of GDP to guide policies and ensure debt remains at moderate levels; timeline for adoption should consider heightened uncertainties.
  • Ongoing enhancements: IFC became operational in January 2025; A-PEFA assessment completed in June 2024; wage bill reform eliminating distortions completed last FY.
  • Support for BOJ’s cautious, data-dependent monetary policy with scope to lower the policy rate but caution warranted due to heightened global uncertainties.
  • Structural recommendations include deepening FX markets by reducing surrender requirements and scaling back BOJ’s FXI, deepening capital markets, further de-dollarizing the economy, boosting banking sector competition, adopting Basel III, expanding BOJ supervisory remit, and unifying financial supervision under a twin-peaks regime.
  • Jamaica exited FATF’s increased monitoring (grey list) in June 2024; authorities preparing for the fifth round of the Mutual Evaluation Process (expected by mid-2026).
  • A multipronged approach is required to overcome supply-side constraints: address low productivity, high crime, barriers to competition, poor educational outcomes, inadequate infrastructure, and barriers to trade through product and labor market reforms, education, infrastructure, trade, and climate-aware reforms.

Recent performance and outlook

• Recent achievements and state:
  • Reduced public debt over the last decade.
  • Inflation and inflation expectations anchored; inflation converged to the Bank of Jamaica (BOJ)’s target band of 4-6 percent.
  • Current account in surplus for the last two fiscal years due to strong tourism revenues and high remittances.
  • International reserves position continued to improve.
  • Unemployment fell to all-time low levels: 3.7 percent in January 2025.
• Impact of shocks:
  • GDP declined in FY2024/25 due to hurricane Beryl and tropical storm Raphael, which damaged agriculture and infrastructure and undermined tourism; economic activity projected to normalize as these effects wane.
• Outlook and risks:
  • Growth expected to settle at potential rate once FY2025/26 recovery is complete; inflation expected to stabilize within BOJ’s target range.
  • Downside risks: tighter global financial conditions, lower growth in key source markets for tourism, trade policy disruptions, and extreme weather events.
  • Upside risks: faster-than-expected recovery from weather events, favorable tourism trends, favorable commodity price developments.

Fiscal policy, public debt, and public finances

• Fiscal stance and frameworks:
  • Authorities implementing sound macroeconomic policies; prudent fiscal stance supports reduction in public debt toward the FRL target.
  • Maintaining primary fiscal surpluses to reach the FRL’s ceiling of 60 percent of GDP by FY2027/28 emphasized as essential.
  • Recommendation for an explicit operational medium-term debt anchor in the FRL at a level below 60 percent of GDP, with adoption timeline assessed in the context of heightened uncertainties.
• Fiscal framework developments:
  • IFC operational in January 2025 and assessed consistency of current fiscal plans with the FRL.
  • A-PEFA assessment completed in June 2024 with recommendations to enhance public financial management.
  • Reforms of tax and customs administration supporting revenue mobilization; sound debt management continues.
  • Wage bill reform eliminating distortions and improving transparency and competitiveness of public pay completed last FY.

Monetary, financial sector, and external sector policy

• Monetary policy and BOJ:
  • BOJ has anchored inflation around the mid-point of its 4-6 percent target band; inflation expectations declined to close to the upper band of the BOJ’s target range.
  • Lowering of the policy rate in 2024 was justified given the temporary nature of weather-related shocks and expected convergence of inflation.
  • Staff supports BOJ’s cautious, data-dependent approach; scope to lower policy rate exists but heightened global uncertainties call for caution.
• Financial sector reforms:
  • Recommendations to deepen FX markets (reduce surrender requirements, scale back BOJ’s FXI), deepen capital markets, further de-dollarize the economy, and boost banking sector competition to strengthen monetary transmission.
  • Adoption of Basel III, expansion of BOJ supervisory remit, and unification of financial supervision under a twin-peaks regime are progressing.
  • Jamaica exited FATF increased monitoring (grey list) in June 2024; AML/CFT strengthening continues.
• External position:
  • Current account surpluses for the last two fiscal years supported by tourism and remittances.
  • International reserves improved.

Structural reforms and supply-side constraints

• Key structural impediments identified:
  • Low productivity from misallocation of resources, high crime, barriers to competition, poor educational outcomes, inadequate infrastructure, and barriers to trade.
• Policy responses:
  • Authorities addressing barriers through product and labor market reforms, education, infrastructure, trade, and climate-aware reforms, including measures completed under the RSF last September.
  • These reforms have potential to catalyze private sector financing for climate-related investment.

Key statistics and selected economic indicators

• Population (2023): 2.84 million
• Per capita GDP (2023): US$6,850
• Quota (current; millions SDRs/% of total): 382.9/0.08
• Literacy rate (2022)/Poverty rate (2021): 91.7%/16.7%
• Main products and exports: alumina, tourism, chemicals, mineral fuels, bauxite
• Unemployment rate (January 2025): 3.7%
• Key export markets: U.S., U.K., Canada

• Real GDP growth (%):
  • 2022/23 Act.: 4.7
  • 2023/24 Act.: 1.8
  • 2024/25 Act.: -0.8
  • 2025/26 Proj.: 2.2
• Unemployment (%) 1/:
  • 2022/23: 4.5
  • 2023/24: 4.2
  • 2024/25: 3.7
  • Note: As of April. In FY2024/25 January 2025.
• Inflation, end of period (%):
  • 2022/23: 6.2
  • 2023/24: 5.6
  • 2024/25: 5.0
• Inflation, average (%):
  • 2022/23: 9.5
  • 2023/24: 5.1
• Central government finances 2/:
  • Budgetary revenue (% of GDP): 2022/23: 30.1; 2023/24: 30.6; 2024/25: 33.3; 2025/26: 31.7
  • Budgetary expenditure (% of GDP): 2022/23: 29.8; 2023/24: 30.5; 2024/25: 33.0
  • Budget balance (% of GDP): 2022/23: 0.3; 2023/24: 0.0
  • Central government primary balance (% of GDP): 2022/23: 5.8; 2023/24: 5.7; 2024/25: 5.9; 2025/26: 5.2
  • Public entities balance (% of GDP): 2022/23: 1.4; 2023/24: 2.3; 2024/25: 1.7
  • Public sector balance (% of GDP): 2022/23: 2.0
  • Public debt (% of GDP): 2022/23: 77.0; 2023/24: 73.4; 2024/25: 69.2; 2025/26: 64.9
  • Note: Fiscal year: April 1 to March 31. Government finances according to the authorities' definitions.
• Money and credit:
  • Broad money (% change): 2022/23: 9.8; 2023/24: 9.1
  • Credit to the private sector (% change): 2022/23: 10.5; 2023/24: 9.4; 2024/25: 6.1
  • Treasury bill rate, end-of-period (%): 2022/23: 8.3; 2023/24: 8.1
  • Treasury bill rate, average (%): 2022/23: 8.2; 2023/24: 7.1
• Balance of payments:
  • Current account (% of GDP): 2022/23: 1.9; 2023/24: 3.1; 2024/25: 2.6; 2025/26: 1.3
  • FDI, net (% of GDP): 2022/23: 1.5; 2023/24: 1.0
  • Gross international reserves (months of imports): 2022/23: 6.4; 2023/24: 7.2; 2024/25: 6.8
  • External debt (% of GDP): 2022/23: 78.8; 2023/24: 69.6; 2024/25: 62.6; 2025/26: 58.5
• Exchange rate:
  • End-of-period REER (appreciation +): 2022/23: 5.4; 2023/24: -0.7

Sources: Jamaican authorities; UNDP Human Development Report; Information Notice System; and Fund staff estimates and projections.

Press Release No. 25/219, June 25, 2025, IMF Communications Department.

References

• https://www.imf.org/-/media/images/imf/bios/imfboard.jpg
• The Executive Board
• Jamaica and the IMF
• IMF Policy Advice -- A Factsheet
• Press Releases
• PRESS CENTER
• www.imf.org/Jamaica
• https://www.imf.org/en/home