The International Monetary Fund (IMF) this week projected economic growth of 4.3 per cent for Jamaica this year, down from the 4.7 per cent it predicted last year.

According to the IMF, risks, including the coronavirus pandemic, remain significant despite the signs of the island’s economy rebounding.

“Renewed COVID-19 waves in Jamaica or abroad could lead to a more prolonged disruption of tourism, trade, and capital flows. Another risk is posed by the uncertain duration of global inflationary pressures, which have boosted inflation to well above the Central Bank’s target range of 4-6 per cent. Natural disasters continue to be an ever-present risk,” the IMF said at the conclusion of its executive board’s 2021 Article IV consultation with Jamaica.

The IMF noted that, in the decade before the pandemic, Jamaica had made good progress in restoring macroeconomic and financial stability.

The Fund had provided financial support to the island, allowing Jamaica to bring its fiscal deficit down from 11 per cent of gross domestic product (GDP) in 2009 to a surplus. In addition, public debt fell from 142 per cent of GDP to 94 per cent in 2019 and inflation and the current account deficit declined.

The IMF said that impact of the pandemic on the economy was severe, with real GDP falling by 10 per cent, even though an early lockdown in 2020 assisted in containing the number of COVID-19 cases.

In their assessment, the IMF directors said they welcomed the authorities’ swift and comprehensive policy response to the pandemic, which helped limit its health and economic impact.

Over the medium term, they said the country would have to focus on the need to rebuild buffers, safeguard debt sustainability, and prioritise structural reforms that reduce poverty and boost potential and inclusive growth.

They also noted that, once the pandemic recedes, it will be important to resume growth friendly fiscal consolidation and put public debt on a downward trajectory toward the authorities’ medium-term target.

The directors recommended improving revenue and prioritising expenditures to create space for health, education, infrastructure, and growth-enhancing investment, including for climate resilience.