Durrant Pate/Contributor

Finance Minister Favyal Williams is seeking to allay concerns raised by Jamaica’s Independent Fiscal Commission (IFC) regarding the government’s budget figures.

Opening the 2026/2027 Budget Debate in parliament this afternoon, Williams sought to clarify and put in context the budget numbers, over which the IFC raised concerns in a critique posted on its website last week.

The IFC has expressed concern that the government’s nominal GDP growth projection of 9.2 per cent and real GDP growth of negative 0.5% implied a GDP deflator of approximately 9.7 per cent. The IFC argued that this appears inconsistent with current inflation trends and with historical post-disaster price behaviour. 

Standing by the numbers

However, while declaring her respect for the IFC’s concerns, Williams, who is making her second Budget Debate presentation, is standing by her numbers.

According to the minister, “The Consumer Price Index (CPI) measures the change in the cost of living for consumers. This figure includes the cost of imports and locally produced goods, while the GDP deflator measures how the prices of everything produced within Jamaica have changed. We are seeing a significant increase in the cost of construction….There is more inflation than we would like in construction costs.”

Continuing, she explained, “The bottom line is CPI and GDP deflators are related but not the same. In normal times, they track closely, and there is little difference. However, in the aftermath of an event like a category 5 hurricane, where (i) domestic production in certain areas has been decimated with scarcity influencing prices of locally produced goods and (ii) 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 acknowledged that the IFC is right that the government’s reconstruction activity in Jamaica has historically been delayed, and capital underspending at the level of government is an issue. “But Madam Speaker, if our GDP deflator projection rests entirely on government-executed reconstruction, I would be standing here on weaker ground. But it does not,” she told fellow Members of Parliament.

Minister Williams highlighted that 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.

According to the Finance Minister, “that activity does not pass through our procurement system, and it will not wait. That activity is in full bloom all over Jamaica. She made the point that “these two measures of the CPI and GDP Deflator are related, but fundamentally distinct measures, and conflating them would itself be an error.”