House Approves One-Year Suspension of Fiscal Rules to Support Hurricane Melissa Recovery

The House of Representatives, on Tuesday (December 2) approved an Order permitting the temporary suspension of the fiscal rules for an initial period of one year as the country advances its recovery from the impact of Hurricane Melissa.

Explaining the process for suspending the fiscal rules, Minister of Finance and the Public Service, Hon. Fayval Williams, noted that the Planning Institute of Jamaica (PIOJ) provides its estimate of gross domestic product (GDP) growth, while the Bank of Jamaica (BOJ) presents its outlook on inflation, Net International Reserves (NIR), balance of payments, and the status of the financial sector.

“This information then becomes the basis for the Ministry to project the Hurricane Melissa impact on tax revenues, impact on expenditure, debt-to-GDP (gross domestic product) ratio and fiscal balance, among the important variables,” she said.

“This information then goes to the Independent Fiscal Commission, which verifies that the impact of the hurricane on the economy is at least 1.5 per cent of GDP because that is the law that guides suspension of the fiscal rules,” the Minister added.

Mrs. Williams informed the Lower House that the Ministry of Finance recently received a report from the Independent Fiscal Commission, entitled ‘Validation of Fiscal Impact of Hurricane Melissa for the Suspension of Fiscal Rules – Financial Year 2025/26’.

“It states that, based on the information provided by the Planning Institute of Jamaica (PIOJ) and the Ministry of Finance and the Public Service, the fiscal impact is estimated at 5.3 per cent of GDP over the period fiscal year 2025/26 to fiscal year 2029/30 – well above the legislative threshold of 1.5 per cent to trigger suspension of the fiscal rules,” she stated.

“As such, the Order… subject to affirmative resolution, will permit the fiscal rules to be temporarily suspended for, at least, an initial period of one year. This is how the law states it. If it warrants an extension, then the Ministry of Finance and the Public Service will present the case,” the Minister added.

Meanwhile, Mrs. Williams said the debt-to-GDP ratio is projected to rise to 68.2 per cent by the end of fiscal year 2025/26.

“If you recall, we ended fiscal year 2024/25 at 62.4 per cent and were on a path to be at 60 per cent by end of this fiscal year, which is two years earlier than planned. In the medium-term, starting with fiscal year 2026/27, we project that the debt to GDP ratio will decline to 66.1 per cent, then to 63.8 per cent followed by 63.4 per cent in fiscal year 2028/29, and then at 64.2 per cent by fiscal year 2029/30,” she stated.