Debt-To-GDP Ratio To Fall To 96 Per Cent
By: , March 11, 2022
Photo: Adrian Walker
Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, highlights a point while opening the 2022/23 Budget Debate in the House of Representatives on Tuesday (March 8).The Full Story
Jamaica’s debt-to-gross domestic product (GDP) ratio is projected to recover to 96 per cent by March 2022 as the economy continues its strong rebound from the coronavirus (COVID-19) pandemic.
The debt-to-GDP ratio was 94 per cent at the onset of COVID-19 in March 2020, but due to the pandemic and the measures implemented to slow its spread, the ratio increased to approximately 110 per cent by March 2021.
“For Jamaica, given our vulnerabilities, this was a high and risky level of debt,” said Minister of Finance and the Public Service, Dr. the Hon Nigel Clarke, while opening the 2022/23 Budget Debate on Tuesday (March 8) in the House of Representatives.
“Well, a year later, I am pleased to report that along with strong GDP growth and strong jobs growth, we have also significantly reduced our debt-to-GDP ratio,” he noted.
He said that barring any major surprises, by the end of the upcoming fiscal year, the ratio should be below 90 per cent for the first time in 23 years.
Dr. Clarke said that jobs recovered at a rapid pace during 2021/22, with 100,000 added between July 2020 and July 2021, and 75,000 between October 2020 and October 2021.
Significantly, the unemployment rate in October 2021 fell to 7.1 per cent, the lowest level in Jamaica’s history.
The Finance Minister noted that Jamaica is ranked at second among 30 countries in the Latin America and Caribbean region in restoring the national debt level to almost pre-COVID-19 levels by 2021.
He said that most countries in the region have debt-to-GDP ratios that are up to 60 percentage points higher than their pre-COVID-19 levels.
“This is Jamaica’s achievement… and this achievement lowers the risk of the Jamaican economy and provides better protection for turbulence,” he pointed out.\
The debt-to-GDP ratio compares what the country owes to what it produces annually.
Government debt as a percentage of GDP is used by investors to measure a country’s ability to make future payments on its debt, thus impacting borrowing costs and Government Bond yields.