Fiscal Commissioner highlights threats to medium-term debt targets

Jamaica's Fiscal Commissioner says the country's public finances remain broadly sustainable, but warns that key risks could threaten medium-term debt targets, arising from the impact of Hurricane Melissa.

 

Fiscal Commissioner Courtney Williams, in his formal opinion on the Government's Fiscal Policy Paper, tabled under the Independent Fiscal Commission Act and the Financial Administration and Audit Act, said the fiscal responsibility framework worked as intended.

 

He noted that the escape clause allowed the temporary suspension of fiscal rules to support recovery spending after the hurricane.

 

He cautioned, however, that while the Government projects a return to a declining debt-to-GDP path next fiscal year, the target of reducing debt to 60 per cent of GDP by 2029/30 is unlikely to be met, based on current information.

 

The Commissioner said projections are preliminary and were prepared without a detailed damage and loss assessment from Hurricane Melissa, or full operational plans from the National Reconstruction & Resilience Authority, known as NaRRA. He also raised concerns about optimistic growth projections, an ambitious capital budget, and uncertainty surrounding wage settlements.

 

While new revenue measures (including GCT on digital services and higher special consumption taxes on alcohol, tobacco and sweetened drinks) are expected to generate 18 billion dollars, he says stronger compliance with the fiscal rules is needed.

 

Among his recommendations are a full consolidated fiscal profile of the specified public sector, better alignment of wage negotiations with the budget cycle, improved execution of capital projects, and the rebuilding of disaster-risk financing buffers.

 

The Fiscal Commissioner said until detailed reconstruction plans and updated damage assessments are completed, he cannot confirm that the Government's current fiscal path will achieve its 60 per cent debt target within the proposed timeline.