Jamaica’s fiscal outlook steadier after Hurricane Melissa, but capital spending gap raises concern

Jamaica’s economy has held up better than expected after Hurricane Melissa, but the country’s capital spending performance remains a concern, according to Fiscal Commissioner Court Williams of the Independent Fiscal Commission.

Williams said the commission, which reports to Parliament and is headed by a commissioner appointed by the Governor-General, reviews the Government’s fiscal plans, including revenue, taxes and spending, and assesses whether the numbers in the budget are credible.

He said Melissa caused heavy damage across the country, affecting infrastructure, lives and livelihoods, with losses estimated at almost J$2 trillion. The Government’s early post-hurricane assessment helped shape fiscal projections for 2025-26, including expectations that inflation would rise to about 10 per cent after food prices climbed sharply following damage to agriculture.

Williams noted that inflation instead came in just above four per cent, within the Bank of Jamaica’s four to six per cent target band. He attributed the better result in part to the quick return of farmers to production, which helped push down prices for some goods by around January.

The economic contraction was also milder than first feared. Williams said the economy had been expected to shrink by about 4.5 per cent, but the decline was under two per cent. Public debt also increased by less than the Government had anticipated.

However, Williams said the capital budget raised a separate issue. The Government had planned capital expenditure of about J$162 billion, up from just over J$90 billion the year before. The Independent Fiscal Commission had warned in a March report that such a jump appeared too ambitious.

By year-end, capital spending fell short by about J$57 billion. Williams said some of that gap reflected unrealistic forecasting, but he stressed that delayed capital work has real consequences. Capital expenditure covers major public investments such as roads, schools, hospitals and police stations, and when projects are postponed, communities wait longer for those services. He said some projects may continue into the following year, though the unspent amount does not simply roll over automatically.