KINGSTON, Jamaica — The Independent Fiscal Commission has signaled that the fallout in gross domestic product (GDP) as a result of Hurricane Melissa is at a level that necessitates the suspension of the Fiscal Rules.
After this news was relayed to the House of Representatives by Finance Minister Fayval Williams on Tuesday, members approved an Order to suspend the rules for the 2025-26 fiscal year.
This will give the Administration the space it needs to conduct the recovery and construction necessary in the aftermath of the devastating hurricane.
Williams said information was presented by the Planning Institute of Jamaica, Bank of Jamaica and her ministry and forwarded to the fiscal commission that verified that the impact of the hurricane on the economy is at least 1.5 per cent of GDP. “That is the law that guides the suspension of the fiscal rules,” she stated.
She said the fiscal impact is estimated at 5.3 per cent of GDP over the period – fiscal year 2025/2026 to fiscal year 2029/30, “well above the legislative threshold of 1.5 per cent to trigger suspension of the fiscal rules”.
The Order, which was approved by the House, permits the temporary suspension of the fiscal rules for an initial period of one year. Where an extension is warranted, the finance ministry will present the case to the Parliament.
Williams said real GDP is now projected to decline by 4.3 per cent for fiscal year 2025/26 compared to the growth forecast of 2.2 per cent presented in the Fiscal Policy Paper in February this year.
For the medium term, real GDP growth is projected to average in the range of one to two per cent as the economy recovers from the contraction projected for the current fiscal year.
“We also expect inflation to stabilise within the target range of four to six per cent,” she said.