Editorial | Minister Williams and Independent Fiscal Commission

The law establishing the Independent Fiscal Commission (IFC) sets out specific rules for the publication of reviews of the government’s fiscal strategies and outcomes. It is silent on if, or how, the finance minister should respond.

The legislation, however, is operationally still recent, only now entering its second budget cycle. So, there is yet no, or obviously emerging, convention on ministerial reaction to the agency’s critiques and suggestions. If Fayval Williams, the finance minister, has responded to anything that the fiscal commissioner, Courtney Williams, has said in his reports since he started issuing them in 2025, it probably has been treated as private.

However, when she formally opens debate on the government’s J$1.4 trillion budget later this week, Minister Williams should publicly address a number of critical observations that Mr Williams repeated in his recently released the Economic and Fiscal Assessment Report (EFAR) that reviewed the outcomes for the first nine months of 2025/2026 fiscal years and evaluates the administration’s projections for the fiscal year that begins April.

While Commissioner Williams, on one hand, concluded that with the adjustments after the devastation caused by Hurricane Melissa in October “Jamaica’s fiscal policy remains broadly sustainable”, he, on the other, warned the government of its need “to address multiple statutory and operational gaps to enable me to deem the budget wholly credible”.

The assessed cost of the hurricane in damage to property and infrastructure was US$8.8 billion, or more than 42 per cent of the island’s GDP.

“I am especially concerned that the FY2026/27 nominal GDP growth projection (9.2 percent), which implies a GDP deflator of 9.7 per cent, appears inconsistent with current inflation and historical post-disaster price behaviour,” Mr Williams wrote in the document. “This creates a significant risk of overstating nominal GDP, over-projecting revenue and understating debt ratios.”

UNDERMINE

One fear is that this could undermine the government’s target of a debt-to-GDP ratio of 60 per cent by the end of the 2029/2030 fiscal year. This is after a two-year suspension of the fiscal rules, allowing the government to run higher deficits as it responds to the hurricane. Before the hurricane, Jamaica was on track to reach the 60 per cent ratio by the end of the current fiscal year, two years ahead of schedule. Currently, the debt is hovering just above 68 per cent of GDP.

Among the range of issues that cause Mr Williams concern, two especially are particularly to attract the attention of the government – and the public – because of their potential for being politically, socially and economically disconcerting. These are the IFC’s remarks about the government’s wage bill and the State’s competence – or lack of it – in spending on capital projects.

The latter is particularly important on two critical fronts.

The government is expected to accelerate the reconstruction and repair of critical infrastructure that will help to generate growth at a pace that keeps the debt on a downward trajectory, while delivering sufficient surpluses for the government to sustain its social and other investments.

But, as Mr Williams pointed out, having established capital budgets, the government tends not to meet its spending targets. For example, in the first nine months of the current fiscal year (April-December, 2025) the central government spent J$31.2 billion on capital projects, or 3.7 per cent of its total expenditure. This was J$18.5 billion, or 32 per cent below the J$49.7 billion it should have spent over the period. At that rate it is unlikely that the central government will spend anything close to the J$62.6 billion it budgeted for capital works over the entire year.

“This performance represents a continuing trend of under-execution of capital spending on public sector investment projects,” Commissioner Williams wrote.

SELF-FINANCING BODIES

These failures are not only at the centre. It happens, too, in the self-financing public bodies, which, in the nine months to December 2025, reported a combined balance of $74.3 billion, against a projected $23.7 billion. This was primarily because they under-spent by $29.7 billion on capital projects. Which is a recurring theme.

Combined, these public bodies and the central government spent nearly J$50 billion less on capital projects than was budgeted.

“This slow pace of delivery continues to undermine the credibility of the forecast and raises doubts about the GOJ’s capacity to exhaust the remaining 48.8 percent of the $135.4 billion total capital expenditure allocation to the Specified Public Sector for FY 2025/26” the Fiscal Commission said.

Government officials often blame burdensome procurement rules for this underspending. While they sometimes contribute to delays, the regulations bear an unfair burden for the delays. The larger issue is weak capacity in ministries, agencies and departments, as well as the failure to sufficiently involve procurement professionals and legal specialists early in the process. This failure tells later on.

The identified problems are fixable, without a wholesale undermining of accountability rules. But it would require a clear commitment from the government. In any event, Minister Williams must address the matter.

Commissioner Williams’ other serious concern, which he raised in two previous reports, is the continued upward movement in the government’s wage bill, since it moved a fiscal cap in 2021/2022 - from 8.8 per cent of GDP to this year’s 13.8 per cent. It is expected to fall by to 13 per cent by FY2029/2030.

“Despite the projected decline, the wages and salaries ratio will remain elevated,” Mr Williams said in his report. Given the foregoing, the IFC reiterates its suggestion for the GOJ to consider re-introducing a “fiscal rule” in order to anchor wages and salaries expenditure and keep the underlying expenditure in check.”

Ms Williams must also speak to this issue.