Finance Minister Responds to Budget Concerns in Fiscal Commissioner Report

Minister of Finance and the Public Service, Hon. Fayval Williams, has responded to concerns highlighted in the Independent Fiscal Commission’s report, published on its website, regarding the Government’s Budget figures.

The Commission was established to analyse the Government’s Budget and provide an independent, secondary opinion.

Opening the 2026/27 Budget Debate in the House of Representatives on Tuesday (March 10), Mrs. Williams emphasised that the Government respects the views of the Fiscal Commission.

“The Commissioner has expressed concern that our nominal GDP (gross domestic product) growth projection of 9.2 per cent and the real GDP growth of negative 0.5 per cent imply a GDP deflator of approximately 9.7 per cent, and that this appears inconsistent with current inflation trends and with historical post-disaster price behaviour,” she stated.

Providing context, Mrs. Williams explained that the Consumer Price Index (CPI) measures changes in the cost of living for consumers.

She noted that this figure includes the cost of imports and locally produced goods, while the GDP deflator reflects changes in the prices of all goods and services produced within Jamaica.

“We are seeing a significant increase in the cost of construction. Try buying some housing material, try hiring a workman, a plumber or a mason. If you can find one, as country people would say, ‘you have to pay through the nose’. There is more inflation than we would like in construction cost,” Mrs. Williams stated.

The Independent Fiscal Commissioner noted that the Government’s reconstruction activities have not yet accelerated and, therefore, inflation, as measured by the GDP deflator, could not be as high as estimated.

“I want to call the Commissioner’s attention to the fact that there is a lot of reconstruction activities happening all over Jamaica, on the part of businesses and private people. The bottom line is, the CPI and GDP deflator are related but not the same thing. In normal times, they track closely and there is little difference,” Mrs. Williams said.

“However, in the aftermath of an event like a Category-Five hurricane, where domestic production in certain areas has been decimated with scarcity influencing prices of locally produced goods and there is surge in demand for reconstruction from citizens and businesses, we can have a wider than usual variance between CPI and the GDP deflator. It is not abnormal or suspicious,” she added.

Mrs. Williams also acknowledged the Commissioner’s more pointed concern that the Government’s reconstruction efforts in Jamaica have historically faced delays.

“He is right that capital underspending at the level of government is an issue. But if our GDP deflator projection rests entirely on government-executed reconstruction, I would be standing here on weaker ground. But it does not. The primary driver of near-term reconstruction price pressure will be the private sector, by way of insurance-financed hotel refurbishment, household rebuilding, and foreign direct investment in damaged commercial infrastructure,” she stated.

The Minister added that this activity does not go through the Government’s procurement system and, therefore, will not be delayed.

“That activity is in full bloom all over Jamaica. These two measures – Consumer Price Index and GDP Deflator – are related but fundamentally distinct measures… and conflating them would itself be an error,” Mrs. Williams stated.