The first quarter of 2016 delivered Jamaica’s most consequential political transition in more than four years, as Andrew Holness led the Jamaica Labour Party to a single-seat majority in the February 25 general election, ending Portia Simpson Miller’s second term as Prime Minister. The new administration inherited an economy stabilised by three years of IMF programme discipline and an infrastructure pipeline dominated by externally financed multilateral projects whose institutional momentum would continue regardless of the electoral outcome — but faced immediate choices about prioritisation, pace and the political management of a fiscal framework it had criticised in opposition.
Key Highlights
- JLP wins February 25 general election by one seat (32-31); Andrew Holness is sworn in as Prime Minister on March 3, 2016, becoming Jamaica’s youngest head of government.
- New administration reaffirms commitment to the IMF Extended Fund Facility; Finance Minister Audley Shaw indicates continuity of fiscal targets through the programme’s scheduled 2017 completion.
- Winter tourism season records strong January-February arrivals; peak weeks at Montego Bay and Negril resorts show occupancy rates among the highest in five years.
- Kingston Container Terminal transition planning continues under new government; KFTL operational handover on track for July 1, 2016.
- National Works Agency reviews inherited road rehabilitation pipeline; new Ministry of Economic Growth and Job Creation established to oversee infrastructure, land and the environment.
- LNG project negotiations reviewed by incoming administration; JLP had committed in opposition to accelerating the gas-to-power transition.
The Election and the Transition of Power
The February 25 general election produced one of the closest results in Jamaican parliamentary history: the Jamaica Labour Party won thirty-two seats in the sixty-three-seat House of Representatives, defeating the People’s National Party which won thirty-one seats after holding power since December 2011. Andrew Holness, who had briefly served as Prime Minister in 2011-12 before losing the election called by his predecessor Bruce Golding, returned to Jamaica House on March 3, 2016 as the country’s youngest Prime Minister. Portia Simpson Miller, who had led the PNP since 2006 and served as Prime Minister from January 2012, conceded gracefully and the transfer of power was conducted without incident.
For infrastructure and economic policy, the most pressing question of the transition was whether the new government would maintain the IMF programme framework that had anchored Jamaica’s macroeconomic stabilisation since 2013. The JLP had criticised specific aspects of the PNP’s fiscal management in opposition, but Finance Minister Audley Shaw — a former Finance Minister himself — moved quickly to reassure the Fund and international investors that Jamaica would meet its EFF obligations. This commitment was both economically prudent and politically necessary: any departure from the programme would have triggered immediate market reaction and potentially jeopardised the gains in sovereign credit standing that three years of compliance had produced.
The new Cabinet configuration reflected the JLP’s own priorities and political dynamics. A Ministry of Economic Growth and Job Creation was established, consolidating responsibilities for infrastructure, housing, land management and the environment that had previously been distributed across several ministries. The appointment carried a signal: the new government intended to frame infrastructure investment explicitly within a growth and employment narrative rather than the consolidation-and-adjustment language that had dominated the PNP years. The incoming minister would inherit a capital programme pipeline shaped almost entirely by the multilateral lending agreements signed by his predecessors, with limited room to introduce new priorities within the existing fiscal envelope.
IMF EFF: Eleventh Review and Transition Continuity
The eleventh quarterly review under the Extended Fund Facility — the penultimate review before the programme’s scheduled conclusion — was in progress during the quarter, assessing performance through December 2015. The review was complicated by the mid-quarter change of government, as IMF missions had to establish working relationships with an entirely new set of ministerial counterparts while assessing whether the incoming administration’s policy commitments were compatible with the programme framework. Shaw’s early reassurances and the new government’s stated intention to honour EFF targets satisfied the Fund’s immediate concerns.
The eleventh review found Jamaica in compliance with quantitative performance criteria, with the primary surplus maintained at the target level through the end of 2015. The structural benchmark assessment noted continuing progress on public enterprise reform and tax administration, though several benchmarks related to the divestment of non-core government assets remained outstanding. The debt sustainability update confirmed that the debt-to-GDP ratio was tracking below the programme’s baseline projection, reflecting the cumulative effect of fiscal discipline and the PetroCaribe buyback.
Tourism: Winter Peak and New Government Priorities
The January-to-March 2016 winter peak tourism season recorded strong stopover arrivals, continuing the upward trajectory that had characterised the post-2013 period. The Montego Bay resort corridor operated at near-capacity during peak weeks in January and February, with the Chinese-owned Secrets and Dreams properties in the Rose Hall corridor adding room inventory that was absorbed without difficulty by the North American source market. The Jamaica Tourist Board’s first-quarter data indicated that the United States remained dominant at approximately 70 percent of stopover arrivals, with Canada and the United Kingdom maintaining their secondary positions.
The new administration’s tourism strategy was still being formulated at the close of the quarter, but the incoming government had signalled during the campaign that it intended to accelerate tourism infrastructure investment — particularly road access to resort towns and marina and berthing facilities for the cruise segment — as part of its growth agenda. The fiscal reality of the EFF framework constrained the pace at which any new tourism infrastructure investment could be introduced, but the sector’s strong performance provided political cover for arguing that enhanced infrastructure support would yield revenue returns that could justify the investment.
Kingston Container Terminal: Final Approach to KFTL Handover
The operational transition planning for the Kingston Container Terminal entered its final three months before the July 1, 2016 handover of management to Kingston Freeport Terminal Limited. The joint Port Authority of Jamaica-KFTL transition teams were completing the work programme established when the concession was signed in June 2015: finalising equipment transfer arrangements, confirming IT system migration timelines, settling commercial contract novations with shipping line customers and completing the training and staffing arrangements that would govern the first days of KFTL’s operational responsibility.
The new government’s transport and infrastructure officials conducted briefings with the Port Authority and KFTL during the transition-of-power period, satisfying themselves that the concession process had been conducted properly and that the incoming administration had no grounds to revisit the agreement. The CMA CGM-backed concessionaire’s thirty-year tenure at KCT represented one of Jamaica’s most significant private infrastructure commitments and was understood by both political parties as a transaction that had moved beyond the point of political contestation. Container throughput through the quarter continued at levels consistent with recent quarters, with transshipment cargo reflecting the carrier’s wider network decisions.
Road Infrastructure: Pipeline Review Under New Administration
The new Ministry of Economic Growth and Job Creation undertook a review of the inherited road infrastructure pipeline in the weeks following the March 3 swearing-in. The review was a standard incoming-government exercise: understanding which projects were under construction and could not be stopped, which were in procurement and could be accelerated or reordered, and which were in planning and could be reprioritised. The dominant finding, consistent with experience across multiple administrations, was that the overwhelming majority of the active capital programme was externally financed and locked into procurement frameworks that did not leave much room for political reordering.
The National Works Agency continued its road maintenance and rehabilitation operations through the transition period without interruption. The IDB western parishes programme, the World Bank transport sector programme and the Caribbean Development Bank road works in the eastern parishes all continued under their established supervision and disbursement arrangements. The NWA’s technical staff — experienced in transitions of government — ensured that contractors on active sites received payment instructions and that works in progress were not disrupted by the political change.
The JLP’s electoral manifesto had promised acceleration of road rehabilitation investment and the introduction of a national road maintenance programme with dedicated funding. These commitments could not be implemented within the EFF fiscal framework in the short term, but the incoming government indicated its intention to use the final year of the programme to identify fiscal space for a post-EFF infrastructure push. The credibility of that promise would depend on the government’s continued compliance with EFF targets and the trajectory of the debt ratio in the programme’s final months.
Energy and LNG: New Government Reviews Inherited Process
The LNG project — in commercial negotiation since the 2014 request for proposals and without a preferred developer through the PNP’s final year in office — was reviewed by the incoming JLP administration. Holness and his energy minister found a process that had stalled in part because of the low global oil price environment that had complicated project economics, and in part because of the complexity of reaching commercial terms that satisfied the government’s value-for-money requirements while remaining financeable for private investors.
The JLP had been critical in opposition of the PNP’s handling of the LNG procurement, arguing that the process had been too slow and that Jamaica was paying too high a price for heavy fuel oil generation as a result of the delay. The new administration signalled its intention to review the process and, if necessary, restructure the commercial approach to accelerate a conclusion. The Jamaica Public Service Company, whose fuel cost pass-through mechanism meant that the cost of delayed gas-to-power transition fell directly on electricity consumers, was closely engaged with the incoming energy ministry on the options available.
Housing and Urban Infrastructure: NHT Continuity
The National Housing Trust, whose contribution levy revenues provided a steady stream of capital independent of the central government budget, continued its housing construction and loan programmes through the political transition without disruption. The Trust’s construction pipeline — including NHT-built schemes in several parishes and joint venture developments with private developers — was managed by a professional executive team that provided institutional continuity across political transitions. The incoming government reviewed the NHT’s strategic plan and indicated support for continuing the agency’s core mandate of providing affordable housing finance and construction to qualifying contributors.
Urban infrastructure in Kingston — drainage, road maintenance, public space management — remained the responsibility of the Kingston and St Andrew Municipal Corporation, which faced the perennial challenges of managing a dense urban environment with revenue sources that did not keep pace with maintenance needs. The new government’s local government portfolio was being settled into the incoming Cabinet structure, with the relationship between the new Ministry of Economic Growth and Job Creation and the municipalities in infrastructure delivery still being defined at the close of the quarter.
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