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General

  • According to Fitch BMI’s latest country risk report, Jamaica's sustainable fiscal trajectory is expected to continue in 2025. This is expected to be supported by strong institutional frameworks, including the Independent Fiscal Commission (operational since January 1, 2025) and the 2010 Fiscal Responsibility Law.
  • Fiscal balances are anticipated to remain stable over the near and medium term, with the overall fiscal balance narrowing from 0.2% of GDP in FY2024/2025 to 0.01% in FY2025/2026. The primary balance is expected to remain strong, though gradually declining from 5.9% in FY2023/24 to 5.1% in FY2025/2026 and 3.5% in FY2026/2027.
  • Preliminary data for FY2025/26 reinforces confidence in fiscal discipline, as government spending during April–June was 6.5% below budget, while revenue collection aligned with projections. Notably, there is no indication of increased spending ahead of the 2025 elections, reflecting continued political consensus around fiscal responsibility.
  • Digital modernisation in tax and customs administration is expected to strengthen revenue collection over time, enhancing Jamaica’s fiscal resilience and allowing for greater flexibility in using fiscal policy to support long-term economic growth.
  • Although fiscal risks remain low, Jamaica’s debt sustainability remains sensitive to natural disasters and climate-related shocks, which could affect revenue and expenditure in the longer term, despite the country’s overall positive fiscal outlook.

 (Source: BMI, A Fitch Solutions Company)

  • The Bank of Mexico cut its benchmark interest rate by 25 basis points on Thursday, August 7, 2025, in a divided vote, slowing its pace of monetary easing and bringing the rate to its lowest level in three years. The decision by the bank's five-member governing board brings the rate to 7.75%, its lowest since mid-2022.
  • The move was largely expected by the market after the bank's governing board signalled at its last meeting in June 2025 that it would move to smaller reductions after four consecutive cuts of half of a percentage point. Banxico, as the Bank of Mexico is known, has been balancing dual challenges. It is seeking to bring down inflation while also stimulating the economy amid weak economic growth and uncertainty tied to trade tensions and geopolitical developments.
  • In a statement, the central bank said the board's decision "took into account the behaviour of the exchange rate, the weakness of economic activity, and the possible impact of changes in trade policies worldwide." The bank said the board will assess further adjustments to the benchmark rate in future meetings.
  • Official data released earlier on Thursday, August 7, 2025, showed that Mexico's annual headline inflation slowed in July to 3.51%, its lowest level since late 2020, although the closely watched core index remained above the bank's official target at 4.23%. Banxico targets inflation at 3%, plus or minus a percentage point.

(Source: Reuters)

 

  • The Bank of England cut interest rates on Thursday, but four of its nine policymakers - worried about high inflation - sought to keep borrowing costs on hold.
  • Difficulty reaching an agreement meant the Monetary Policy Committee had to hold two rate votes for the first time in its history. With the MPC split over how to respond to an inflation rate that the BoE forecasts will soon be double its 2% target and a recent worsening of job losses, Governor Andrew Bailey and four colleagues backed lowering the Bank Rate to 4% from 4.25%
  • But that was only after a first round of voting ended in a 4-4-1 split with external MPC member Alan Taylor initially backing a half-point cut. The four members of the MPC who backed keeping rates on hold included Clare Lombardelli, the deputy governor for monetary policy, who broke from the majority for the first time. Chief Economist Huw Pill also voted to keep the Bank Rate at 4.25%.
  • The BoE repeated its guidance about "a gradual and careful approach" to further cuts in borrowing costs but added a new line to its message on the outlook, hinting that its run of rate cuts might be nearing an end.
  • A halt to the process of cutting rates would be a blow for finance minister Rachel Reeves and Prime Minister Keir Starmer, who have struggled to meet their promise to voters to speed up Britain's slow economic growth. Bailey said the decision to cut rates for the fifth time since August last year was "finely balanced," although he thought they were still on a downward path.

(Source: Reuters)

 

  • The House of Representatives has approved the first supplementary estimates of expenditure for the 2025/26 fiscal year. The Estimates have now moved from $1.26Tn to $1.27Tn.
  • In her remarks, Minister of Finance and the Public Service (MFPS), Hon. Fayval Williams, said the estimates will facilitate the allocation of $58.1Bn to ministries, departments, and agencies (MDAs).
  • She informed that of this sum, $55.6Bn is earmarked to cover additional salaries and allowances arising from agreements between the Government and public-sector unions and staff associations during fiscal year 2024/25. “This supplementary also takes into consideration the $1.1Bn for the three per cent subsidy on residential electricity usage as expenditure in the central government expenditure budget, and $1.4Bn for the acquisition of 110 buses for the rural school bus service,” the Minister stated.
  • Additionally, she said it “facilitates the transfer of $35.3Bn from the contingencies allocation under the Head 200001, MFPS, to assist in financing the additional expenditure of the MDAs. It will also assist with the reprioritisation of expenditure totalling $12.3Bn within the 2025/26 approved Budget to assist in financing the additional spending of the MDAs”.
  • Mrs. Williams stated that approximately $48.1Bn of the committed funds fall under the ‘compensation of employees’ category. This category includes $23.6Bn allocated for advancement along substantive salary bands for eligible central government employees, effective April 1, 2025, in accordance with the agreement reached with the Jamaica Confederation of Trade Unions (JCTU).
  • She further highlighted that while those are some major numbers, there will be a redirection of funds to continue to have a balanced budget for this supplementary.

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[1]A Budget Category Under the Ministry of Finance and the Public Service.