June 25, 2025
PRESS OFFICER: Brian Walker
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Washington, DC: On June 12, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation[1] with Jamaica and considered and endorsed the staff appraisal without a meeting. The authorities have consented to the publication of the Staff Report prepared for this consultation.[2]
Over the last decade, Jamaica has successfully reduced its public debt, firmly anchored inflation and inflation expectations, and strengthened its external position. It has built an enviable track record of investing in institutions and prioritizing macroeconomic stability. Jamaica has met recent global shocks and natural disasters in an agile, prudent, and growth-supportive manner. GDP declined in FY2024/25 due to hurricane Beryl and tropical storm Raphael which damaged agriculture and infrastructure and undermined tourism. Nonetheless, economic activity is projected to normalize as these effects wane. Unemployment has fallen to all-time low levels (3.7 percent in January 2025) and inflation has converged to the Bank of Jamaica (BOJ)’s target band of 4-6 percent. The current account has been in surplus for the last two fiscal years with strong tourism revenues and high remittances. The international reserves’ position has continued to improve.
The outlook points to growth settling at its potential rate once the FY2025/26 recovery is complete, with inflation stabilizing within the BOJ’s target range. Nonetheless, global developments require continued close monitoring as downside risks emanating from tighter global financial conditions, lower growth in key source markets for tourism, and trade policy disruptions remain high. Finally, extreme weather events could negatively affect economic activity. The Jamaican authorities are implementing sound macroeconomic policies in the context of strong policy frameworks. A prudent fiscal stance supports a reduction in public debt towards the target in the Fiscal Responsibility Law. The Bank of Jamaica has anchored inflation around the mid-point of the inflation target band and inflation expectations have declined to close to the upper band of the BOJ’s target range. The lowering of the policy rate in 2024 was justified in view of the temporary nature of the weather-related shocks and the expected convergence of inflation to the BOJ’s target. The current fiscal-monetary policy mix places Jamaica in a good position to respond to the various downside global risks, should they realize.
Executive Board Assessment
“In concluding the 2025 Article IV consultation with Jamaica, Executive Directors endorsed staff’s appraisal, as follows:
“Over more than a decade, Jamaica has been implementing sound macroeconomic policies supported by strong policy frameworks. These efforts have allowed Jamaica to accumulate meaningful policy buffers, reduce public debt, anchor inflation, and improve its external position.
“Recent policy efforts have further strengthened fiscal responsibility, improved the effectiveness of public sector compensation, bolstered tax and customs administration, enhanced financial oversight, and built resilience to climate change including in the context of the recently completed PLL/RSF arrangements. These advances allowed agile, prudent, and growth-supportive responses to recent global shocks and natural disasters.
“The economy, which declined in FY2024/25 due to the weather events, is rebounding this year and is projected to grow at its potential rate with risks broadly balanced. The recovery is supported by a rebound in agriculture and tourism and its spillovers to other sectors. Risks comprise extreme weather events posing downside risks for tourism and agriculture, trade policy shocks, and disruptions to tourism or the flow of remittances. Upside risks include a faster-than-expected recovery from recent weather events, favorable tourism trends, and favorable commodity price developments.
“Maintaining primary fiscal surpluses to reach the FRL’s ceiling of 60 percent of GDP by FY2027/28 remains essential. However, fiscal policy could become too pro-cyclical in the face of severe shocks when the debt-to-GDP ratio reaches the FRL’s target. Incorporating an explicit operational medium-term debt anchor in the FRL at a level below 60 percent of GDP would help guide policies and ensure that debt is kept at moderate levels, creating fiscal buffers to respond to adverse events. The timeline for the eventual adoption of an operational debt anchor should be assessed in the context of heightened uncertainties, which could limit the country’s ability to meet a lower debt anchor in the medium-term.
“The authorities continue to improve the fiscal policy framework. The IFC became operational in January 2025 and assessed the consistency of current fiscal plans with the FRL. The A-PEFA assessment was completed in June 2024, providing recommendations to enhance public financial management. Reforms of tax and customs administration are supporting revenue mobilization, and sound debt management continues. The wage bill reform eliminating distortions and improving the transparency and competitiveness of the public pay to help retain skilled employees was completed last FY.
“Ongoing efforts to bolster the monetary and financial policy frameworks should continue. Staff supports the BOJ’s cautious data-dependent monetary policy, noting that there should be scope to lower the policy rate but the heightened global uncertainties call for a cautious approach. An inflation targeting regime with a strong international reserves’ position and stable FX markets have served Jamaica well. Going forward, there is scope to deepen FX markets by reducing surrender requirements and scaling back the BOJ’s FXI. Deepening capital markets, further de-dollarizing the economy, and boosting banking sector competition would improve resource allocation and help strengthen monetary transmission. The adoption of Basel III, the expansion of the BOJ supervisory remit, and unification of financial supervision under a twin-peaks regime are all going in the right direction. Jamaica exited FATF’s increased monitoring (grey list) in June 2024. Building on this achievement, the authorities continue to strengthen AML/CFT and are preparing for the fifth round of the Mutual Evaluation Process (expected by mid-2026).
“A multipronged approach is required to overcome supply-side constraints to growth. Low productivity resulting from the misallocation of resources is amplified by structural impediments including high crime, barriers to competition, poor educational outcomes, inadequate infrastructure, and barriers to trade. The authorities are addressing these barriers through product and labor market reforms, education, infrastructure, trade, and climate-aware reforms including by completing reform measures under the RSF completed last September. These reforms have the potential to catalyze private sector financing for climate-related investment.”
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Table. Jamaica: Selected Economic Indicators |
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Population (2023): 2.84 million |
Per capita GDP (2023): US$6,850 |
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Quota (current; millions SDRs/% of total): 382.9/0.08 |
Literacy rate (2022)/Poverty rate (2021): 91.7%/16.7% |
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Main products and exports: alumina, tourism, chemicals, mineral fuels, bauxite |
Unemployment rate (January 2025): 3.7% |
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Key export markets: U.S., U.K., Canada |
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2022/23 |
2023/24 |
2024/25 |
2025/26 |
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Act. |
Act. |
Proj. |
Proj. |
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Output |
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Real GDP growth (%) |
4.7 |
1.8 |
-0.8 |
2.2 |
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Employment |
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Unemployment (%) 1/ |
4.5 |
4.2 |
3.7 |
… |
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Prices |
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Inflation, end of period (%) |
6.2 |
5.6 |
5.0 |
5.0 |
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Inflation, average (%) |
9.5 |
6.2 |
5.1 |
5.0 |
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Central government finances 2/ |
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Budgetary revenue (% of GDP) |
30.1 |
30.6 |
33.3 |
31.7 |
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Budgetary expenditure (% of GDP) |
29.8 |
30.5 |
33.0 |
31.7 |
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Budget balance (% of GDP) |
0.3 |
0.0 |
0.3 |
0.0 |
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Of which: central government primary balance |
5.8 |
5.7 |
5.9 |
5.2 |
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Public entities balance (% of GDP) |
1.4 |
2.3 |
1.7 |
0.0 |
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Public sector balance (% of GDP) |
1.7 |
2.3 |
2.0 |
0.0 |
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Public debt (% of GDP) |
77.0 |
73.4 |
69.2 |
64.9 |
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Money and credit |
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Broad money (% change) |
9.8 |
9.1 |
6.2 |
9.1 |
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Credit to the private sector (% change) |
10.5 |
9.4 |
6.1 |
9.4 |
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Treasury bill rate, end-of-period (%) |
8.3 |
8.1 |
5.7 |
… |
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Treasury bill rate, average (%) |
8.2 |
8.1 |
7.1 |
… |
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Balance of payments |
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Current account (% of GDP) |
1.9 |
3.1 |
2.6 |
1.3 |
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FDI, net (% of GDP) |
1.9 |
1.5 |
1.0 |
1.3 |
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Gross international reserves (months of imports) |
5.6 |
6.4 |
7.2 |
6.8 |
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External debt (% of GDP) |
78.8 |
69.6 |
62.6 |
58.5 |
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Exchange rate |
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End-of-period REER (appreciation +) |
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5.4 |
-0.7 |
… |
… |
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Sources: Jamaican authorities; UNDP Human Development Report; Information Notice System; and Fund staff estimates and projections. |
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1/ As of April. In FY2024/25 January 2025. |
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2/ Fiscal year: April 1 to March 31. Government finances according to the authorities' definitions. |
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[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/Jamaica page.
