When Jamaica’s statistical authorities compiled the 2013 GDP figures, the number that emerged — positive zero point two per cent — was barely above zero. But it was the right side of zero, and that mattered enormously. It was the island’s first positive growth reading in six years, the first year of EFF compliance was complete without a waiver, and the debt-to-GDP ratio had begun, almost imperceptibly, to turn downward from its historical peak.
- GDP for 2013 records positive growth of 0.2% — first positive reading since 2007
- All four quarterly IMF EFF reviews completed without waivers or missed targets
- Debt-to-GDP ratio begins declining from its 2012 historical peak above 143%
- Tax reform rationalises incentive regimes and broadens the revenue base
- Bank of Jamaica begins cautious interest rate reductions as inflation falls
- Tourism sector records record stopover arrival figures for the calendar year
The number itself was modest to the point of obscurity. Zero point two per cent GDP growth — the economic equivalent of a rounding error — was not the kind of figure that warranted celebration in itself. But its direction mattered. Jamaica’s economy had contracted in 2008, 2009, 2010, and again in 2012. It had grown by a slim margin in 2011 before contracting again. The accumulation of negative growth years had left the island materially poorer than it had been at the onset of the global financial crisis, with lower real incomes, deteriorated infrastructure, and a labour market that had absorbed the damage in the form of elevated unemployment and a growing informal economy. To register positive growth in 2013, however slim, was to signal that the floor had been found.
The fiscal picture was more significant. Four quarterly reviews had been completed under the Extended Fund Facility, and each had found Jamaica compliant with its performance criteria. The primary surplus — which the programme required at seven and a half per cent of GDP — was being maintained. The structural benchmarks were being addressed in sequence: the Tax Administration Jamaica had implemented the first phase of the incentives rationalisation; the Fiscal Responsibility Framework legislation was advancing; the public sector wage agreement was holding. EPOC’s quarterly reports, read by a public that had learned to treat them as the authentic scorecard of the programme’s health, confirmed that the government’s numbers were real. The debt-to-GDP ratio, which had peaked above one hundred and forty-three per cent in 2012, was beginning to decline — slowly, almost imperceptibly, but in the right direction.
The Bank of Jamaica, operating within the monetary policy framework agreed under the EFF, began cautiously reducing interest rates. Inflation had fallen from double-digit levels to a range that was beginning to approach single digits, driven by the combination of tighter monetary policy, the moderation of global commodity prices, and the fiscal consolidation that was reducing the government’s domestic borrowing. Rate reductions, when they came, were measured — the Bank was acutely aware that Jamaica’s external position remained fragile and that a premature loosening of monetary conditions could put pressure on the exchange rate and undo the disinflation that had been so painstakingly achieved.
Tourism was the economy’s standout performer. Stop-over arrivals for 2013 set a new record, driven by strong demand from North American and European visitors and by the continuing expansion of airlift capacity to Jamaican airports. The major resort developments on the north coast were generating employment and foreign exchange, and hotel occupancy rates through the peak winter season were among the strongest the industry had recorded. The Jamaica Tourist Board reported that tourism’s direct contribution to GDP was growing as the sector expanded its accommodation capacity and diversified its product offering beyond the traditional all-inclusive model.
What This Means
The closing of 2013 with a programme intact and a positive growth number was the first confirmation that the architecture constructed in early 2013 — the NDX, the Partnership, EPOC, the EFF itself — was performing as designed. Previous IMF programmes had broken down within their first year. This one had completed its first year with an unbroken record of compliance. That record was not simply reassuring — it was the foundation on which Jamaica’s gradual restoration of fiscal credibility was being built, one quarterly review at a time. Credibility, once lost, takes years to restore. Each passed review was a small but real deposit in an account that had been badly overdrawn.
The Road Ahead
Year two of the EFF would be harder. The structural benchmarks grew more demanding as the programme progressed, and the revenue measures embedded in the tax reform were beginning to face resistance from affected sectors. The public sector wage agreement, which had been the programme’s most politically sensitive component, would need to be maintained through another budget cycle. And the economic growth that had resumed so tentatively in 2013 would need to be sustained — not just as a political necessity but as the mechanism through which the debt-to-GDP ratio would decline fast enough to matter. The numbers were moving in the right direction. The task was to keep them there.
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