Jamaica Structural Fiscal Position Expected to Improve In FY2021/22

• Jamaica's total public debt burden is expected to rise relative to GDP in the short term due to falling revenue and emergency pandemic spending. However, by FY2021/22 Fitch Solutions forecasts that Jamaica's debt will resume its pre-COVID downward trajectory, falling to 58.8% of GDP by 2030. 
• After defaulting on its sovereign debt in 2010 and 2013, Jamaica has significantly improved its fiscal position via IMF-prescribed fiscal consolidation measures. In November 2019, the government exited its second IMF programme, with debt on a steady downward trajectory. 
• The government cut expenditure from 36.6% of GDP in FY2009/10 to 29.0% in FY2019/20, lifting the budget balance from -10.5% of GDP to 0.9% over the same period. However, the COVID-19 pandemic reversed much of Jamaica's gains, as collapsing revenue and increased public health expenditure resulted in the primary surplus shrinking from 7.3% of GDP in FY2019/20 to an estimated 1.7% of GDP in FY2020/21. 
• The GOJ will continue to decrease its share of the country's total economy over the coming years as a result of ongoing fiscal consolidation. Government final consumption as a percentage of GDP fell from 16.3% in 2012 to 13.5% in 2018. It is expected that further restraint on spending by the Jamaican government will see this figure remain around 14.0% of GDP over the coming decade, particularly as real GDP growth picks up.

(Source: Fitch Solutions)