Minister Clarke Credits Economic Rebound to Prudent Fiscal Management

Minister of Finance and the Public Service, Dr. the Hon Nigel Clarke, is crediting Jamaica’s economic recovery from the coronavirus (COVID-19) to the prudent fiscal measures implemented by the Government.

The Minister, who was opening the 2022/23 Budget Debate on Tuesday (March 8) said that the buffers put in place prior to the pandemic, including the strategic decision to increase cash cushions through privatisations, reintegration of public bodies, and targeted fiscal overperformance enabled a strong rebound.

He said that the Government took the decision to increase non-borrowed reserves by US$1 billion since 2016, through exchange rate flexibility and inflation targeting, and put away disaster funds in 2018 and 2019 that were drawn down in the first few months of the pandemic.

Other strategic decisions taken, he noted, included abolishment of distortionary transaction taxes and capitalisation of the Central Bank with $20 billion in 2018 and 2019, which allowed it to make unprecedented liquidity injections into the banking system.

Dr. Clarke said that the Government made sustainable and internally consistent policy choices during the crisis and maintained discipline in rejecting proposals that fell outside of that criterion.
“As a result, our economic recovery in Jamaica has been faster and stronger than the vast majority of our peers in the Caribbean, quite a few of whom had the unfortunate experience of a second year of economic decline in 2021,” he pointed out.

Tourism was a key driver in the recovery process, recording growth at more than 300 per cent in the second quarter of 2021, over 100 per cent in the third quarter, and greater than 75 per cent in the fourth quarter.

The construction industry also experienced consistent growth throughout the period.

Dr. Clarke noted that except for mining, all sectors of the economy recovered strongly and showed growth for the last three quarters of 2021/22, enabling the country to stage a strong and robust recovery and weather the shock delivered by the pandemic.

The economy experienced 14 per cent growth in the first quarter of the fiscal year, which is the highest quarterly growth rate ever recorded in Jamaica.

Growth was 5.8 per cent for the second quarter and the economy is projected to expand by six per cent in the third quarter, and seven to nine per cent for the fiscal year.