Coronavirus Response Will Push Jamaica's Fiscal Balance Into Deficit

• According to Fitch, Jamaica’s fiscal balance will decline to -2.6% of GDP in FY2020/21, down from 0.9% in FY2019/20 (April 2019 – March 2020), as contracting economic activity weighs on revenues and spurs the government to increase expenditures. If this materializes, it will be Jamaica’s largest fiscal deficit since FY2012/13.
• Fitch forecasts real GDP for Jamaica will contract by 5.1% y-o-y in 2020 as the coronavirus pandemic severely undercuts export demand and private consumption. The recession will undermine income tax and the General Consumption Tax (GCT) receipts, which accounted for an estimated 28.0% and 35.2% of total government revenues in FY2018/19.
• In addition, Fitch expects government expenditures on public health will increase, with total expenditures climbing 1.5% y-o-y in FY2020/21.
• While it is expected that Jamaica’s public debt load will head higher, to 96.9% of GDP by end-2020, a longer-term commitment to debt reduction will bring government debt to 74.0% of GDP by 2025, Fitch says.

 (Source: Fitch)