Economist hails 'credible' 2025/26 budget

A top economist has described the Government’s budget for the upcoming financial year as “credible”.

Dr Adrian Stokes cited, as evidence, the Government’s commitment to run a balanced budget for the 2025-2026 financial year, which begins on April 1.

“This is very, very important because it means that there will be no deficit spending,” said Stokes, chief executive officer of Quantas Capital.

“In other words, the country remains on a path to reduce the debt-to-GDP (gross domestic product) ratio to approximately 63 per cent by the end of fiscal year 2025-2026,” he added.

Stokes said given where Jamaica is coming from – a reference to Jamaica’s historically high debt-to-GDP ratio – “this would be a significant achievement, the fact that we are close to 60 per cent”.

With national elections due by September this year, Minister of Finance and the Public Service Fayval Williams, who opened the Budget Debate yesterday, said the Government could have run a deficit.

She noted that based on the fiscal rules, the Government is allowed to run a deficit equivalent to no more than 0.3 per cent of GDP and that would still keep the country on a path to the targeted 60 per cent debt-to-GDP ratio by financial year 2027-2028.

However, Williams said after discussing the issue with Prime Minister Dr Andrew Holness, he indicated – and she agreed - that running a deficit would be a bad signal to send to the world in an election year.

“There is no greater testimony to the high regards that this government has for the fiscal affairs of this country, and by extension the Jamaican people, than for Jamaicans to know that this government stared a budget deficit in the face that we legitimately could have run in an election year and said no thank you,” the finance minister said in Parliament.

Another evidence of the credibility of the budget, Stokes said, was the fact that the Government is returning taxes to citizens.

Williams announced that the income tax threshold will be increased to $2 million, phased in over a three-year period.

The first increase, which takes effect on April 1 this year, will see the income tax threshold move from $1.7 million to $1.8 million.

Stokes noted that Jamaicans have shouldered “a lot of responsibility” with the imposition of taxes to help consolidate the fiscal accounts and make a material dent in the debt-to-GDP ratio.

He said the phased implementation of the returns means “the feasibility of the give-back to the Jamaican people is there”.

“The fact that at this stage taxes can be returned to the people is an extremely good thing,” said Stokes.

- Livern Barrett

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