Fueled by higher expenditure and lower revenue & grants

Durrant Pate/Contributor

Central Government operations recorded a fiscal deficit of $66.1 billion or 1.8 per cent of gross domestic product (GDP), down from the surplus of $34.1 billion or 1.0 per cent a year ago. 

The outturn for the quarter as a percentage of GDP reflected higher expenditure as well as lower revenue and grants (particularly tax revenue) relative to the corresponding period of 2025. The higher expenditure was reflected mainly in programmes and compensation of employees. 

The Bank of Jamaica (BOJ) revealed the numbers in its latest Quarterly Monetary Policy Report MAY 2026, tabled in the Senate last Friday. For FY2025/26, Central Government operations recorded a fiscal deficit of 2.5 per cent of GDP ($90.5 billion), relative to the surplus of 0.2 per cent of GDP ($7.7 billion) for FY2024/25. 

The fiscal deficit for the quarter as a percentage of GDP shows higher expenditure and lower revenue and grants (particularly tax revenue) relative to the corresponding fiscal year. The higher expenditure was reflected mainly in programmes and compensation of employees

Lower revenue and grants

For the quarter, the lower revenue and grants as a ratio of GDP relative to the March 2025 quarter reflects mainly lower tax revenue arising from the shift in the deadline for corporate and asset tax returns to April 15, 2026, from March 15, 2026. The higher expenditure for the quarter, relative to the March 2025 quarter, was largely reflected in programmes and compensation of employees. 

The increase in programmes was due to spending on hurricane-related activities. The rise in compensation of employees was due to higher wages & salaries arising from the payment of productivity incentives (via increment payments) earned by staff over the period FY2022/23 to FY2024/25. 

The financing requirement for the Central Government for the March 2026 quarter was $83.3 billion (2.3 per cent of GDP), reflecting a fiscal deficit of $66.1 billion (1.5 per cent of GDP) and amortisation of $17.3 billion (0.5 per cent of GDP). Financing during the quarter was sourced from domestic and external sources amounting to $138.1 billion (3.8 per cent of GDP) and $73.5 billion (2.0 per cent of GDP), respectively. 

Issued securities and amortisation

Domestic loans reflected Benchmark Investment Notes (BIN) and Treasury bill issuances amounting to $117.7 billion (3.3 per cent of GDP) and $5.0 billion (0.1 per cent of GDP), respectively. External loan receipts amounted to US$467.7 million reflecting loans from multilateral agencies.  

Amortisation for the March 2026 quarter primarily reflected external amortisation which consisted of US$29.6 million (0.1 per cent of GDP) and US$48.6 million (0.2 per cent of GDP) to bilateral and multilateral lending agencies, respectively. Domestic amortisation included Treasury bill maturities of $4.9 billion (0.1 per cent of GDP). Against this background, there was a build-up of $129.2 billion (3.6 per c cent of GDP) in Central Government bank balances.