IMF: Jamaica staff concluding statement of the 2026 Article IV Mission

KINGSTON, Jamaica – November 11, 2026: An International Monetary Fund (IMF) team led by W. Raphael Lam held meetings in Kingston with Jamaican authorities and representatives of the private sector, civil society, and development partners during October 27–November 4 to conduct the 2026 Article IV consultation. At the conclusion of the mission,

Lam issued the following statement:

“Jamaica’s strong policy frameworks and sustained reforms have underpinned its resilience in the aftermath of hurricane Melissa, the strongest in Jamaica’s recorded history. The authorities’ effective disaster risk financing framework, together with the strength of its fiscal, monetary and financial sector frameworks, have supported an appropriate policy response to cushion the severe impact while preserving market access on favorable terms. The priority now is to advance reconstruction while preserving macroeconomic stability and deepening reforms, considering the more challenging external environment.

“Economic activity is recovering gradually. Following a contraction of 1.2 percent in FY2025/26, growth is projected to recover moderately to 1.3 percent in FY2026/27, with output returning to its pre-hurricane level by mid-2027, supported by reconstruction efforts and a recovery in tourism. Headline inflation, largely driven by higher energy and food prices, has risen above the Bank of Jamaica’s target band of 4-6 percent, yet is projected to return within the target band by mid-2027 as supply pressures ease. Meanwhile, the current account deficit is projected to widen this fiscal year on account of less favorable terms of trade, although reserve buffers remain adequate partly supported by disaster-related inflows and foreign direct investment.

“Risks to the growth outlook are tilted to the downside, while inflation risks remain on the upside. Higher energy and food prices from prolonged conflict in the Middle East and drought conditions from El Niño, and a further tightening in global financial conditions, could weigh on growth and intensify inflationary pressures. On the domestic front, delays in both reconstruction and restoration of tourism capacity would also weaken the recovery.

“The authorities appropriately eased the fiscal stance in response to hurricane Melissa, although accelerating reconstruction efforts remain essential. The multi-layered disaster risk financing provided rapid liquidity, including through IMF’s Rapid Financing Instrument. The government appropriately activated the fiscal rule’s escape clause to support vulnerable households and hurricane-related reconstruction efforts. Revenue mobilisation efforts to broaden the tax base and strengthen administration are welcome. However, efforts are needed to accelerate reconstruction and build back better by closing long-standing infrastructure gaps and strengthening resilience to future natural disasters. The establishment of a new National Reconstruction and Resilience Authority (NaRRA) provides an opportunity to do so, although work should continue in enhancing procurement, contract management, public investment management, and interagency coordination to address implementation bottlenecks. Meanwhile, containing non-priority recurrent spending remains essential, including by ensuring that the current fuel price smoothing mechanism continues to operate symmetrically to ensure cost recovery over time.

“Preserving debt sustainability remains a priority. As reconstruction advances and the output gap closes, fiscal efforts need to shift toward rebuilding buffers. Revenue mobilisation and restraint in current spending growth are critical to preserve fiscal space for priority investment and return public debt to a sustained downward path. The authorities’ efforts to broaden the tax revenue base and strengthen administration are welcomed, along with the intention to develop a mechanism to anchor medium-term public wage growth in a manner consistent with the fiscal framework. These efforts are necessary to reduce the public debt, which reached about 66 percent of GDP in FY2025/26, over the medium term. The authorities expect public debt to decline to about 60 percent of GDP by FY2031/32, although a faster consolidation path could be considered to reduce debt sooner and reinforce policy credibility while containing financing costs.

“Monetary policy should be appropriately tight, especially given persistent price shocks. The Bank of Jamaica’s September policy rate hike was appropriate given above-target inflation and persistent commodity-price pressures. Monetary policy should remain focused on anchoring inflation expectations and limiting second-round effects, particularly as fiscal policy supports reconstruction efforts. Continued clear communication is also important in the context of global price pressures and tighter global financial conditions. Alongside an active monetary policy response to inflation risks, greater exchange rate flexibility would strengthen Jamaica’s capacity to absorb external shocks, including those coming from less favourable terms of trade. Over time, scaling back foreign exchange interventions would allow the exchange rate to play a greater buffering role and support foreign exchange market development. Ongoing initiatives to strengthen banking competition and deepen domestic capital markets should improve monetary transmission.

“The financial system remains resilient, but continued vigilance and reforms are needed. Systemic risks in the financial sector are moderate, with strong bank capital and liquidity buffers supporting financial stability following hurricane Melissa. Continued close monitoring of credit and market risks, insurers’ financial positions, and vulnerabilities stemming from financial groups’ interconnectedness remains essential. In addition, cybersecurity risks require increased attention, building on the sector-wide cyber intelligence sharing hub. Going forward, priority should be given to finalising the necessary legislation and regulations to advance the “Twin Peaks” supervisory framework, and to enhancing consolidated supervision of financial holding companies. Meanwhile, efforts should continue in advancing Basel III implementation, integrating climate risks in supervision, enhancing the AML/CFT framework, and broadening private insurance coverage among households and firms in a responsible fashion.

“Addressing supply-side constraints is essential to raise potential growth and enhance resilience. Strengthening energy security and electricity infrastructure, including by accelerating the transition toward renewable energy sources, would reduce Jamaica’s exposure to imported fuel prices. Progress should continue in reducing crime, streamlining the regulatory burden for businesses, improving education outcomes and workforce skills, and addressing broader infrastructure bottlenecks. Continued implementation of reforms to strengthen climate resilience will help Jamaica better withstand future shocks.

“The IMF team is grateful to the Jamaican authorities and other counterparts for their hospitality, openness, and highly productive discussions.”