... Gaps trigger credibility concerns from fiscal commissioner

Fiscal Commissioner Courtney Williams has raised questions about the credibility of aspects of the Government’s 2026-2027 Budget in his Economic and Fiscal Assessment Report (EFAR).

In his assessment of the Government’s macroeconomic and fiscal forecasts, the career economist said Jamaica’s fiscal policy remains broadly sustainable, supported by a resilient Fiscal Responsibility Framework and significant disaster-risk financing layers.

However, Williams argued that the fiscal outlook is uncertain, noting that the Government “needs to address multiple statutory and operational gaps to enable me to deem the Budget wholly credible”.

The preparation of the Independent Fiscal Commission’s EFAR is a requirement under the Independent Fiscal Commission’s Act, 2021 and the Financial Administration and Audit Act (FAA).

Discussing key findings of the EFAR, Williams said the Budget process has improved, but some aspects are still non-compliant with the FAA Act.

While welcoming the historical tabling of revenue measures with other Budget documents, including the Fiscal Policy Paper, the fiscal commissioner said there remain major gaps.

He said wage settlements between the administration and public-sector workers continue to be out of sync with the Budget cycle, thereby prolonging fiscal uncertainty and raising budgetary risks.

Noting that rising fiscal pressures require structural correction, Williams pointed to what he termed ‘major risks’, which include wages and salaries not aligned with economic performance; continued absence of a compensation negotiation cycle; chronic under-execution of capital expenditure; continued reliance on one-off, non-tax revenues; and recurring climate-related shocks.

“I reiterate the commission’s view that by not anchoring wages to economic performance, Jamaica risks eating its ‘seed corn’ – prioritising wages today at the expense of capital investments required for tomorrow’s growth and climate resilience,” he declared.

The fiscal commissioner also gave the thumbs up to the Government’s new revenue measures, arguing that they broadly support fiscal sustainability.

Williams said new measures, particularly general consumption tax on digital services and special consumption tax adjustments on alcohol, tobacco and sweetened drinks, will broaden the overall tax base and improve alignment with health and environmental policy objectives.

He said overall revenue gain of $18.0 billion in financial year 2026-2027, excluding the $11.4-billion continuing transfer from the National Housing Trust, which is not a new measure, “appears credible, provided they are implemented timely”.

Turning to the “credibility” of the medium-term macroeconomic and fiscal projections of the Government, Williams said they were “mixed and inconclusive”.

He said the projections are quite preliminary and did not benefit from a detailed damage and loss assessment from Hurricane Melissa, and the operational and expenditure plans of the National Reconstruction & Resilience Authority.

The fiscal commissioner said these omissions materially affect the Government’s growth projections, nominal gross domestic product (GDP) – and hence, revenue forecast; expenditure timing; and current account forecasts, all of which inform fiscal and debt outcomes.

“I am especially concerned that the fiscal year 2026-2027 nominal GDP growth projection (9.2 per cent), which implies a GDP deflator of 9.7 per cent, appears inconsistent with current inflation and historical post-disaster price behaviour. This creates a significant risk of overstating nominal GDP, over-projecting revenue and understating debt ratios,” he said.

Furthermore, Williams said the near-doubling of the capital budget for the Specified Public Sector, amid ongoing capacity constraints and procurement bottlenecks, is overly ambitious.

He reasoned that, given the legacy of low execution of capital projects, it is implausible to expect the spend to increase from the fiscal year 2025-2026 Fourth Supplementary Estimates of $135.4 billion (and the actual expenditure for the full fiscal year is likely to be much lower) to $204.9 billion in fiscal year 2026-2027.

Williams said it is unclear whether the full estimated costs of wage settlements are factored into the 2026-2027 Budget. He said the finance ministry has not provided detailed information on the contingency allocation of $42.8 billion to allow him to ascertain the sufficiency of such provision.

edmond.campbell@gleanerjm.com