Prior to the pandemic, Jamaica had successfully stabilized the economy, turning a fiscal deficit of 11 per cent of GDP in 2009 into a 1 percent surplus in 2019, and reducing public debt from 142 per cent of GDP in 2009 to 94 per cent by 2019. The stabilization paid off through a sharp decline in interest rates, and the government’s interest bill fell from 17 per cent of GDP in 2009 to 6 per cent in 2019.
When the economy was hit by the pandemic, the government temporarily reduced the fiscal balance target to increase spending on health and social protection and reduced the VAT rate.
To safeguard the country’s hard-won economic stability and in line with the Fiscal Responsibility Law, the government aims to reduce public debt to 60 per cent of GDP by 2028. This will further reduce interest payments, creating scope to boost spending on education, infrastructure, and poverty reduction, as well as improving the country’s resilience to natural disasters.
*Editor’s Note: Follow the link below for the infographic in the original article: https://www.imf.org/en/News/Articles/2022/02/18/cf-jamaica-works-to-maintain-its-hard-won-economic-stability
