Jamaican Government to Narrow Its Fiscal Deficit and Prioritise Debt Repayment in 2022

• Fitch Solutions forecasts that the Jamaican government will reduce its fiscal deficit to 0.1% of GDP in FY2022/23 (April 1, 2022 – March 31, 2023), from an estimated 0.3% in FY2021/22, as revenue growth outpaces spending. 
• The government ran budget surpluses from FY2017/18 to FY2019/20 to comply with consecutive IMF programmes from 2013 to 2019. However, the impact of the COVID-19 pandemic caused economic activity and government revenues to contract in FY2020/21, flipping the balance into a deficit. 
• With the effects of the pandemic subsiding, Fitch expects that the GOJ will return to a path of consolidation in the coming years as it winds down social spending initiatives enacted during the pandemic. In the short-to-medium term, the government will likely increase debt repayments and contain current expenditures, resulting in a budget surplus in FY2023/24. 
• Revenues will grow to 29.5% of GDP in FY2022/23, from an estimated 28.3% in FY2021/22, driving a reduction in the deficit. It is expected that increased inflows of foreign tourists owing to a resumption of travel and tourism, and a tightened labour market over the coming months will boost receipts from the General Consumption Tax (GCT), and income tax intakes.

(Source: Fitch Solutions)