Jamaica’s Fiscal Deficit Expected to Widen in FY2026/27

Jamaica’s fiscal deficit is expected to widen substantially in FY2026/27 (April 2026-March 2027), to 4.8% of GDP, from 2.5% in FY2025/26. Consistent with the pattern seen in the 10 months since Hurricane Melissa made landfall, BMI expects expenditure to continue rising in FY2026/27 to support the island's recovery, increasing from 32.1% of GDP in FY2025/26 to 33.5% in FY2026/27 on higher current and capital spending.
However, Jamaica's persistent budget-execution issues, already evident in the first three months of FY2026/27, should leave both spending categories below the government's budgeted amounts. On the revenue side, the government's first tax increase in nearly a decade is expected to support collections¹. These measures – including a tax on sugary beverages, a consumption tax on digital imports and a planned tax on vacation rentals for 2027 – will be reinforced by increased investment to strengthen the tax system in the near and medium term. While this will help offset a more severe deterioration in public finances in FY2026/27, lingering revenue-mobilisation challenges and a sluggish, hurricane-damaged economy will continue to weigh on revenues in the near term. Indeed, tax revenue will likely undershoot government estimates in FY2026/27, as already seen in the first three months of the fiscal year.
Consequently, BMI expects Jamaica's debt-to-GDP ratio will meet the 60% target by 2030, a few years behind schedule, a milestone the government had originally targeted for FY2027/28. In December 2025, the government suspended its fiscal rule – as permitted under the enabling legislation once certain thresholds are met – to allow for greater debt spending to fund the ongoing recovery.
As expected, this has driven the debt-to-GDP ratio higher. Over the past two quarters, both the total public debt level and the debt-to-GDP ratio have increased, with the latter rising from just over 60% – the country's long-held fiscal target – to more than 67.0% in Q2 2026, and total debt growing by 6.6% between October 2025 and June 2026. This outcome is consistent with the view that debt would rise in the short term to help finance necessary reconstruction and recovery efforts.
While near-term pressures have pushed debt higher and delayed achievement of the target, BMI expects Jamaica to adopt the fiscal stance needed to return the ratio to its downward path over the medium term. This will be supported by the reimposition of the fiscal rule and by economic recovery – as seen post-pandemic – underpinning Jamaica's sustainable fiscal trajectory and efficacious fiscal anchors. This view is reinforced by the country's institutional strength, robust fiscal and legal frameworks, and enduring political consensus in favour of sustainable public finances.
That said, risks to the outlook are skewed towards greater fiscal pressures in the near term, which could push the fiscal deficit beyond current forecasts. Additional hurricanes pose a significant threat. In addition, with tensions once again flaring in the Middle East between the U.S. and Iran – sending oil prices higher – the resulting shock could strain Jamaica's fiscal accounts. Petrojam, the state oil refinery, is already reporting rising fuel-subsidy costs, despite the government raising the weekly cap on how much domestic fuel prices can increase.

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¹Fitch frequently flags unrealistic or aggressive revenue assumptions as the primary bottleneck in budget execution.

(Sources: BMI, A Fitch Solutions Company)